Oil Lower After Weak Economic Data from China
SECTOR COMMENTARY:
The energy sector is set for a mixed-to-lower start, pressured by weakness in the crude complex . U.S stock futures are flat as investors brace themselves for U.S inflation data later this week and the start of earnings season.
WTI and Brent crude oil are lower, after weak economic data from China and a stronger dollar outweighed supply concerns. Traders digested Chinese factory data earlier this morning which showed producer prices fell at the fastest pace in over seven year in June. While inflation decreased, momentum in China’s post-pandemic recovery has been more sluggish than analyst had predicted. The DOE Office of Petroleum Reserves on Friday announced that it plans to purchase about 6 million barrels of oil for the Strategic Petroleum Reserve (SPR), with receipts scheduled for October and November 2023. The DOE will pursue additional repurchase opportunities as market conditions allow.
Natural gas futures are higher this morning on forecasts for above-normal temperatures within the next two weeks.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
Eni-led renewable energy joint venture GreenIT has signed a deal with UK-based Hive Energy and SunLeonard Energy to build up four agri-voltaic solar projects in Italy, the Italian energy group said. The new sites, will have an overall capacity of up to 200 mega watts (MW) and will be located in the central and southern regions of Lazio, Apulia, and Sicily.
Eni said it delivered the first gas cargo to the liquefied natural gas (LNG) terminal at the port of Piombino, marking the start of commercial operations at the Tuscan regasification site.
Eni delivered an LNG cargo of 90 million cubic meters to the SNAM regasification terminal in Piombino, Italy, today. Unloading operations took place following the completion of the test phase and mark the beginning of the terminal's commercial operation.
Bloomberg reported that Petroleo Brasileiro SA officials expect to fall short of the government’s goals to slash natural-gas prices by 40% because of the high cost of extraction in ultra-deep waters.
TotalEnergies and local producer Sonatrach agreed to hike natural gas production in Algeria, the French company said, adding that the two companies had also extended their partnership in the field of liquefied natural gas (LNG). The combined production of two gas fields in the country is now expected to exceed 100,000 boe per day by 2026, versus a level of around 60,000 boe per day in 2022, TotalEnergies said in a statement. Sonatrach had announced the agreement on Sunday.
TotalEnergies and State Oil Company of the Republic of Azerbaijan (SOCAR) announced the start of production for the first phase of the Absheron gas and condensate field in the Caspian Sea. Located approximately 100 km (62 miles) southeast of Baku, the site boasts a production capacity of 4 million cubic meters of gas per day and 12,000 barrels a condensate per day, TotalEnergies said in a statement, adding that gas from this field will be sold on Azerbaijan domestic market.
Iraq and TotalEnergies signed a long-delayed $27 billion agreement to build four oil, gas and renewables projects. The deal was signed in 2021 with an initial investment of $10 billion in southern Iraq over 25 years, but it was delayed amid disputes between Iraqi politicians over terms.
TotalEnergies is to invest $700 million to produce 54 billion cubic meters of gas and 13 million tonnes of condensate with Sonatrach, the Algerian state-owned company said in a statement.
A planned oil pipeline to help Uganda export its crude to international markets has "devastated" the lives of thousands of people who have experienced delayed or inadequate compensation for their land, Human Rights Watch (HRW) said. The rights group also said the project, in which TotalEnergies has a 62% stake, is a disaster for the planet as it will add emissions that exacerbate climate change.
The U.S. presidential election could trigger a major energy shock if Republicans were to win and decide to halt hydrocarbon exports, Patrick Pouyanné, the chief executive of TotalEnergies, said.
The Economic Times reported that the Adani Group said that it has raised investments of almost $9 billion in the past four years, including from some of the world's leading investors such as Qatar Investment Authority (QIA), Total Energies, International Holding Company (IHC) and GQG Partners.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Gerdes Energy Research downgraded Magnolia Oil & Gas to Neutral from Buy.
CANADIAN E&PS
Vermilion Energy announced that the Toronto Stock Exchange has approved the notice of Vermilion's intention to commence a normal course issuer bid through the facilities of the Toronto Stock Exchange, New York Stock Exchange and other alternative trading platforms in Canada and USA. The NCIB allows Vermilion to purchase up to 16,308,587 common shares, representing approximately 10% of its public float as at June 28, 2023, over a twelve month period commencing on July 12, 2023. The NCIB will expire no later than July 11, 2024.
OILFIELD SERVICES
KBR announced it has earned a Gold Rating from EcoVadis, one of the world's largest and most trusted providers of business sustainability ratings for global supply chains. The Gold Rating places KBR in the top 5% of assessed companies.
U.S. Silica Holdings announced that it has completed a $25 million voluntary term loan principal repayment. The debt was extinguished at par using excess cash on hand.
DRILLERS
RBC downgraded Helmerich and Payne to Sector Perform from Outperform.
RBC upgraded Patterson-UTI Energy to Outperform from Sector Perform.
REFINERS
Calumet Specialty Products Partners, L.P. provided a second quarter update on Montana Renewables and the Specialties business. During the second quarter, Montana Renewables became the largest sustainable aviation fuel producer in North America in addition to establishing itself as a top tier renewable diesel business. The Northwest Louisiana Specialties complex completed recovery from tornado events which interrupted external utilities and production.
MLPS & PIPELINES
DHT Holdings provided the following business update: For the second quarter of 2023, the Company estimates time charter equivalent earnings for its fleet at $56,300 per day, comprising of $36,200 per day for the Company’s VLCCs on time-charter and $64,800 per day for the Company’s VLCCs operating in the spot market. Thus far in the third quarter of 2023, 37% of the available VLCC spot days have been booked at an average rate of $48,000 per day on a discharge-to-discharge basis. 51% of the available VLCC days, spot and time-charter days combined, have been booked at an average rate of $42,200 per day. During the second quarter of 2023, the Company has completed the installation of the two final exhaust gas cleaning systems in the retrofit project. Following this, all of DHT’s vessels are now fitted with exhaust gas cleaning systems.
A fire at Kinder Morgan's refined oil products terminal in Pasadena, Texas that occurred during construction was extinguished on Sunday, and no injuries were reported, the company said.
MARKET COMMENTARY
U.S. stock index futures edged lower, with investors remaining on the sidelines ahead of a crucial inflation report and corporate earnings this week. European stocks rose, lifted by gains in drugmakers. In Asian equity markets, a recovery in Hong Kong and China stocks was curbed by weak statistics on Chinese inflation, while the Nikkei closed in the red, weighed down by a stronger yen. The dollar gained, while gold slipped. Oil prices dipped on demand worries, while expected crude supply cuts from Saudi Arabia and Russia limited losses.
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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