Markets

Energy Sector Set For Mixed-To-Higher Start

Wednesday, May 30, 2018

Sector Commentary

The energy sector is poised for a mixed to higher start, gaining grounds after five-consecutive days of declines for crude and the S&P 500 Energy index while weakness in the major equity futures on geopolitical concerns continued to weigh.

WTI and Brent crude oil futures were both higher, ending their recent losing streak on the backs of reports showing tight supplies and forecasts that U.S. inventories fell last week. The gains also come despite expectations that OPEC and its allies will ramp up production in the second half of 2018 and strength in the dollar against the euro.

Natural gas futures were flat to lower this morning after a contract roll and despite forecasts for a little more demand next week than previously forecast.

U.S. INTEGRATEDS

(Late Tuesday) Reuters - Exxon Mobil shut the large crude distillation unit at its 502,500-barrel-per-day Baton Rouge, Louisiana, refinery for two weeks of repairs.

(Late Tuesday) Press Release - Exxon Mobil acquired a 25% interest in exploration block-G located in Indus Basin, offshore Pakistan, from Oil and Gas Development Company, Pakistan Petroleum, and Eni Pakistan Ltd.

INTERNATIONAL INTEGRATEDS

Reuters - SOCAR and Equinor signed a risk service contract for the development of the Karabakh offshore natural gas field in the Caspian Sea. The two companies also signed a product-sharing agreement on the development of Ashrafi, Dan-Ulduzu and Aypara fields.

Reuters - Naftogaz it had initiated the enforcement of the $2.6 billion award from Stockholm arbitration court from Gazprom and asked Swiss courts to enforce the award.

Reuters - Gazprom said its first-quarter net income had risen 11 percent to 371.6 billion roubles ($6 billion), thanks to higher gas prices and sales volumes, beating analysts expectations. Analysts polled by Reuters expected Gazprom's net income to stand at 338.3 billion roubles. Gazprom's sales in January - March increased by 18 percent to 2.14 trillion roubles.

Reuters - José Alberto de Paula Torres Lima, a board member at Petroleo Brasileiro , resigned on Tuesday.

Reuters - Total said on Wednesday that its plans to drill in the ecologically sensitive Foz do Amazonas basin were still alive, despite Brazil's decision to reject its drilling application.

Reuters - Total has two months to seek exemption from U.S. sanctions after Washington's withdrawal from the international nuclear deal.

CANADIAN INTEGRATEDS

BMO Capital Markets upgraded Husky Energy to 'Outperform' from 'Market Perform'.

U.S. E&PS

National Alliance Securities initiated coverage of Cimarex Energy with a 'Hold' rating.

Northland Capital Markets initiated coverage of Northern Oil & Gas with an 'Outperform' rating.

CANADIAN E&PS

Press Release - Connacher Oil and Gas generated a net loss of $57.2 million (Q1 2017 - net loss of $24.6 million). The increase is primarily due to a lower adjusted EBITDA and foreign exchange losses. Q1 2018 adjusted EBITDA decreased to a deficit of $16.4 million (Q1 2017 - $1.9 million), primarily due to lower revenue, net of royalties.

DRILLERS

Credit Suisse downgraded Noble Corporation to 'Neutral' from 'Outperform'.

Press Release - Valiant Offshore intends to acquire the Leiv Eiriksson and the Eirik Raude rigs, from Ocean Rig UDW . As part of the consideration, Valiant Offshore will pay US$110 MM in cash and will issue 24 MM shares.

MLPS & PIPELINES

Citigroup downgraded CVR Refining to 'Neutral' from 'Buy'.

(Late Tuesday) Press Release - Keyera announced it is proceeding with phase two of its Wapiti Gas Plant, adding 150 million cubic feet per day of sour gas processing to the Plant, which is currently under construction south of Grande Prairie, Alberta. Based on current plans, construction of this second phase is expected to be completed in mid-2020 at an estimated cost of approximately $150 million.

MARKET COMMENTARY

U.S. stock index futures pointed to a higher start for Wall Street ahead of key first-quarter growth data, scheduled for release. European markets edged higher and the euro rose as investors mulled the possibility of a new Italian election as early as July. Asian stocks closed lower with financial and exporter shares pulling Japan's Nikkei down on renewed trade war fears. Oil prices edged higher, supported by tight supplies and a weaker dollar. The safe-haven yen rose and gold prices were steady. Analog Devices is scheduled to report later in the day. ADP's national employment report is on the economic tap.

Nasdaq Advisory Services Energy Team is part of Nasdaq's Advisory Services -- the most experienced team in the industry. The team delivers unmatched shareholder analysis, a comprehensive view of trading and investor activity, and insights into how best to manage investor relations outreach efforts. For questions, please contact Tamar Essner . This communication and the content found by following any link herein are being provided to you by Corporate Solutions, a business of Nasdaq, Inc. and certain of its subsidiaries (collectively, "Nasdaq"), for informational purposes only. Nasdaq makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Sources include Reuters, TR IBES, WSJ, The Financial Times and proprietary Nasdaq research.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.