Oil Down Amid Slowing Demand Forecast by the IEA
SECTOR COMMENTARY:
The energy sector is poised for a mixed to lower start pressured by mild weakness in the major equity futures, despite mild strength in the underlying commodities. U.S. stock index futures turned negative, as a hotter-than-expected producer inflation report suppressed market speculation of an imminent interest rate cut by the Federal Reserve this year. A Labor Department report showed PPI rose 0.3% month-on-month in January, compared with a 0.1% increase expected by analysts. Annually, it rose 0.9% versus the 0.6% estimated growth. Meanwhile, the core figure, excluding volatile food and energy items, rose 0.5% month-on-month compared with an estimated 0.1% increase. On an annual basis, it rose 2% versus the 1.6% expected growth.
WTI and Brent crude oil futures are down in early trading as slowing demand forecast by the IEA offset support from geopolitical tensions and optimism that the U.S. Federal Reserve might cut interest rates sooner than later this year. The IEA said global oil demand growth was losing momentum and trimmed its 2024 growth forecast, contradicting the view held by OPEC. Meanwhile, prices were supported by persisting tensions in the Middle East. Gaza's largest functioning hospital was under siege in Israel's war with Islamist group Hamas, as warplanes struck Rafah, the last refuge for Palestinians in the enclave.
Following eight-consecutive sessions of declines, natural gas futures are rebounding as NatGasWeather said a potential cold front could move into the Midwest and Northeast the last week of February. NOAA forecasts yesterday afternoon had both of those regions experiencing above-normal temperatures from 23-Feb to 29-Feb.
BY SECTOR:
US INTEGRATEDS
Exxon Mobil announced that the securities commissions for the provinces of Alberta and Ontario have issued a decision document, which has the effect of granting ExxonMobil exemptive relief from the disclosure requirements contained in National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (NI 51-101).
Exxon Mobil plans to decide by the end of the year which lithium filtration technology it will use in Arkansas as part of its push to become one of the world's top producers of the battery metal, an executive said.
INTERNATIONAL INTEGRATEDS
Eni announced fourth quarter and full year 2023 results. Proforma adjusted EBIT for Q4 ’23 was €3.8 billion (with a remarkable €17.8 billion in the FY) driven by steady E&P results, a record-breaking GGP performance and a positive contribution from Plenitude. Q4 ’23 adjusted net profit attributable to Eni shareholders was €1.64 billion, with a Group tax rate of about 48%. In the FY’23 adjusted net profit attributable to Eni shareholders was €8.30 billion and a Group tax rate of about 44%.
TotalEnergies completed restarting the crude distillation and gasoline-producing units at its 238,000 barrel-per-day (bpd) Port Arthur, Texas, refinery on Thursday, according to people familiar with plant operations.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Northern Oil and Gas announced a fourth quarter 2023 operations update, also highlighting elective Ground Game acquisitions, and preliminary 2024 guidance. Fourth quarter 2023 production estimated to be 114.4 Mboe per day, resulting in annual production toward the high end of NOG’s guidance range. Executed on $25 million of opportunistic Ground Game acquisitions in the fourth quarter. Initiating preliminary 2024 production and capital spending guidance. 2024 production guidance implies ~20% year over year growth on a flat capital budget at the midpoint of guidance ranges versus preliminary 2023 actuals (excluding non-budgeted acquisitions).
Tellurian announced that the U.S. Federal Energy Regulatory Commission has issued an extension to its order authorizing the construction of Tellurian’s Driftwood LNG facility near Lake Charles, Louisiana. As extended, the order requires construction to be completed by April 18, 2029. Tellurian applied for the extension last year to ensure it had enough time to complete the construction of all five plants of the facility. When completed, the facility will have a capacity of ~27.6 million tonnes per annum (mtpa).
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Enerflex announced the appointment of Mr. Preet Dhindsa as Senior Vice President and Chief Financial Officer, effective March 1, 2024. Mr. Dhindsa has served as the Company’s Interim CFO since October 13, 2023.
TechnipFMC has been awarded a substantial contract by Shell plc for the first integrated Engineering, Procurement, Construction, and Installation project to use high-pressure subsea production systems rated up to 20,000 psi (20K).
DRILLERS
No significant news.
REFINERS
Teamsters said it wants to negotiate a new contract with Marathon Petroleum for its members at the Detroit refinery without having to go on a strike.
MLPS & PIPELINES
TC Energy released its fourth quarter results. Comparable earnings per common share of $1.35 in fourth quarter 2023 increased 22 per cent compared to $1.11 in fourth quarter 2022 and net income per common share of $1.41 in fourth quarter 2023 compared to net loss per common share of $1.42 in fourth quarter 2022. Comparable EBITDA outlook for 2024 is expected to be $11.2 to $11.5 billion and remains consistent with our November 2023 Investor Day.
TC Energy also announced that its Board of Directors (Board) declared a quarterly dividend of $0.96 per common share for the quarter ending Mar. 31, 2024, on the Company’s outstanding common shares. The common share dividend is payable on Apr. 30, 2024, to shareholders of record at the close of business on Mar. 28, 2024.
MARKET COMMENTARY
Futures tracking the S&P 500 and the Nasdaq gained as investors looked ahead to a producer inflation report for more cues on the timing of Fed's interest rate cuts. European shares climbed as stellar earnings updates and hopes of imminent rate cuts by the European Central Bank lifted investors' appetite for risky assets. Japan's Nikkei rallied, buoyed by a strong day on Wall Street overnight. The dollar was little changed, while the yen was anchored around the key 150 per dollar level. Gold held steady, but was on track for a second consecutive weekly fall. Oil prices slipped as a forecast of slowing demand by the IEA offset support from geopolitical tensions.
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 Rich Pontillo.
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