Oil
Oil

Oil Extends Losses Amid Uncertainty Over Fuel Demand

SECTOR COMMENTARY: 

The energy sector is set for a lower start, pressured by weakness in the underlying commodities and the major equity futures which are lower after the Dow and S&P 500 closed at a new 2023 high last Friday.

WTI and Brent crude oil futures are adding to last week’s losses on a stronger dollar, uncertainty over fuel demand and concerns over whether OPEC+’s decision to reduce output will support oil prices. Since the announced cuts by OPEC+ are voluntary, investors are having doubts whether or not producers would fully implement production cuts and how the cuts would be measured. The 10YR yield is higher this morning which is lending support to the U.S. dollar index. Geopolitical tensions in the Middle East are limiting losses within oil contracts as fighting resumes between Israel and Hamas. Last night, three commercial vessels came under attack by Yemen’s Houthi movement in the southern Red Sea.

Natural gas futures are down, and on track to extend four weeks of consecutive losses on above normal temperatures.

BY SECTOR:

US INTEGRATEDS

Exxon Mobil CEO Darren Woods rejected the International Energy Agency's recent claim that using wide-scale carbon capture to fight climate change was an implausible "illusion", saying the same could be said about electric vehicles and solar energy. "There is no solution set out there today that is at the scale to solve the problem," Woods told Reuters on the sidelines of the COP28 climate summit in Dubai.

According to Reuters, Exxonmobil Baytown, Texas facility reported operational issue.

INTERNATIONAL INTEGRATEDS

Aramco's Chief Executive told a panel on the sidelines of the COP28 climate summit in the UAE that that all the renewable energy coming to market is still not enough to handle additional demand. Aramco CEO Amin Nasser added that more investment in the oil and gas sector is still needed.

According to Reuters, Eni signed new 3-billion-Euro sustainability-linked credit line. Credit line is granted by 26 leading global financial institutions.

Kazakhstan signed deals with France's TotalEnergies, United Arab Emirates firm Masdar and Saudi Arabia's ACWA Power 2082.SE to build wind farms with a total capacity of 3 gigawatts (GW), the Kazakh government said. The farms will be built in the southern Zhambyl region, the southeastern Zhetysu region and either Kostanai or Akmola regions in the north, it said.

TotalEnergies announced a donation of $25 million over 2024-2030 to the Global Flaring and Methane Reduction (GFMR) trust fund, an initiative of the World Bank.

CANADIAN INTEGRATEDS

No significant news.

U.S. E&PS 

EQT, the largest producer of natural gas in the United States, announced its participation in the Oil and Gas Decarbonization Charter (OGDC) unveiled at COP28. This landmark charter is dedicated to speeding up climate action and achieving high-scale impact across the oil and gas sectors.

Talos Energy announced the appointment of John Spath as Executive Vice President and Head of Operations, effective immediately. Mr. Spath will have responsibility for the Company's upstream business operations.

Truist Securities upgraded CNX Resources to Buy from Hold.

Truist Securities downgraded Antero Resources to Hold from Buy.

CANADIAN E&PS

No significant news.

OILFIELD SERVICES 

Baker Hughes said Abdulaziz M. Al Gudaimi has been elected as a director, beginning Jan. 1, 2024, on the company's board, expanding it to 10 members from nine. Gudaimi was at Saudi Aramco for 38 years, retiring as its executive vice president of corporate development in November last year, a position he held since September 2020.

According to Reuters, Baker Hughes filed for mixed shelf size not disclosed.

Forum Energy Technologies announced the appointment of Ms. Leslie Beyer to its board of directors. Ms. Beyer will also serve as a member of the Nominating, Governance and Sustainability Committee.

ProPetro Holding announced the successful acquisition of the assets and business operations of Par Five Energy Services LLC. Specializing in cementing services in the Delaware Basin, Par Five’s business complements ProPetro's existing cementing business that operates predominantly in the Midland Basin region of the Permian Basin. The acquired business will be integrated within ProPetro’s existing cementing operating team and brand. This transaction forms a comprehensive cementing business to better serve Permian operators and is complementary to ProPetro’s industry-leading hydraulic fracturing and wireline completions businesses.

DRILLERS

No significant news. 

REFINERS

HF Sinclair forecast lower capital expenditure for 2024, as it expects maintenance costs to fall next year. The company forecast capital spending in 2024 to be $875 million, lower than its expected costs of $940 million-$1.15 billion for 2023. Lower turnarounds and catalysts costs, pegged at $415 million, below the $530 million-$630 million it forecast for 2023, would lead the company's spending trim. U.S. refiners had focused on maintenance activities this year after running at breakneck capacity in 2022 following supply shortages stemming from Russia's invasion of Ukraine. HF Sinclair said the forecast includes expected spending from smaller oil pipeline operator Holly Energy Partners, which it fully acquired this year.

MLPS & PIPELINES

Michigan regulators approved Canadian pipeline company Enbridge application to build a tunnel under the Great Lakes to house its aging Line 5 oil pipeline, a major step forward for the $750 million project. Enbridge is planning to replace a section of the pipeline, which runs underwater for 4 miles (6.4 km) through the Straits of Mackinac between Lakes Michigan and Huron, to address concerns Line 5 could leak.

According to Reuters, enterprise and ONEOK extended terminal transfer fee waiver for ice midland WTI (HOU) crude deliveries to the end of 2025.

BOFA Global Research upgraded ONEOK to Buy from Neutral.

MARKET COMMENTARY

Wall Street futures slipped, with investor focus turning to a slew of important U.S. economic data scheduled for this week. Meanwhile, miners and energy stocks pulled European shares into the red. Japan's Nikkei also ended lower, with automakers leading losses as a weak yen dented the earnings outlook for the country's exporters. Separately, Bitcoin broke above $40,000 for the first time since May 2022 as traders bet on the imminent approval of U.S. stock market-traded bitcoin funds. The dollar gained ground against a basket of currencies. In commodities, gold prices edged lower after reaching a record high earlier. Oil prices dropped due to investor doubt about the recent OPEC+ decision on supply cuts and uncertainty about global fuel demand. Later in the day, U.S. factory orders data is scheduled for release.


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

Nasdaq Energy News

Nasdaq Advisory Services Energy Team is part of Nasdaq's Advisory Services. 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.

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