Oil Prices Higher, Extending Yesterday’s Rally Amid Supply Disruption Risks and Banking Worries
SECTOR COMMENTARY:
The energy sector is poised for a mixed to higher start, steadying amid some mild strength in the crude complex while major equity futures were little changed after the S&P 500 posted its third positive session in a row and banking sector concerns continued to ease.
WTI and Brent crude oil futures firmed higher this morning, extending yesterday’s rally amid supply disruption risks from Iraqi Kurdistan and hopes that turmoil in banking is being contained. Iraq was forced to halt exports of around 450,000 bpd from its northern Kurdistan region through Turkey, following an arbitration decision that confirmed Baghdad's consent was needed to ship the oil. Futures also garnered support from signs of recovering demand in China following reports that oil imports are expected to rise 6.2% in 2023 to 540 million tons in the region.
Natural gas futures continued to slide lower and are hovering around 30-month lows, pressured by rising output and mild weather forecasts that should allow utilities to start injecting gas into storage at the beginning of April. The mild weakness came despite forecasts for a rise in gas demand with the amount of feed gas flowing to LNG export plants on track to hit a monthly record high in March. Data from Refinitiv shows average gas output in the U.S. Lower 48 states rose to 98.5 bcfd so far in March from 98.1 bcfd in February, just shy of the monthly record of 99.9 bcfd from November 2022.
BY SECTOR:
US INTEGRATEDS
The U.S. Supreme Court declined to hear a disbarred environmental lawyer's challenge to his criminal contempt conviction after he earlier won but was unable to collect a $9.5 billion judgment against Chevron over oil pollution in Ecuadorian rainforests.
INTERNATIONAL INTEGRATEDS
bp confirmed that, together with ADNOC, it has made a non-binding offer to take NewMed Energy private through an acquisition of the free float and a partial acquisition of Delek’s stake, which would result in bp and ADNOC holding 50% of NewMed Energy. bp and ADNOC intend to form a new joint venture that will be focused on gas development in international areas of mutual interest including the East Mediterranean.
TravelCenters of America confirmed ARKO Corp's $1.4 billion takeover offer is not superior to its existing proposal from bp.
Citi added bp and Equinor to its Europe Focus list.
Equinor, on behalf of several licences, has awarded contracts for the use of Transocean Encourage, mainly in the Norwegian Sea, and Transocean Enabler, for the Johan Castberg field. At the same time, the companies have signed a strategic collaboration agreement.
CNOOC and TotalEnergies have completed China's first yuan-settled LNG trade through the Shanghai Petroleum and Natural Gas Exchange, the exchange said.
Reuters reported that 33% of operational staff at TotalEnergies' French refineries and depots are on strike Tuesday, a company spokesperson said.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Crescent Point Energy announced that it has entered into an agreement with Spartan Delta to acquire Spartan's oil and liquids-rich Montney assets in Alberta for $1.7 billion in cash.
Diamondback Energy announced that it has joined the Oil and Gas Methane Partnership 2.0 (OGMP 2.0), the United Nations Environment Programme’s flagship oil and gas reporting and mitigation program.
Matador Production has agreed to pay a penalty and ensure compliance with both state and federal clean air regulations at all 239 of its New Mexico oil and gas well pads to resolve unlawful operations alleged in a civil complaint filed under the Clean Air Act and state regulations.
Warren Buffett's Berkshire Hathaway boosted its ownership stake in Occidental Petroleum to about 23.6% after buying nearly 3.7 million additional shares.
TD Cowen upgraded Occidental Petroleum to Outperform from Market Perform.
Pioneer Natural Resources announced that it has priced a public offering of $1.1 billion of 5.100% Senior Notes that will mature March 29, 2026, pursuant to an effective shelf registration statement that was previously filed with the Securities and Exchange Commission.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Forum Energy Technologies has been awarded an approximately $25 million contract to design, engineer, and supply four electrostatic desalter systems for an onshore project at the Safaniyah oil field, Kingdom of Saudi Arabia. The desalter systems will utilize FET’s EDGE desalting technology, ForuMix high efficiency multiphase mixer technology, as well as in-house manufacturing capabilities at FET’s facility in Dammam, Saudi Arabia.
McDermott has been awarded a front-end engineering design (FEED) contract from Shell Trinidad and Tobago for the Manatee gas development project as part of a competitive FEED process. Under the contract scope, McDermott will provide comprehensive FEED services for a wellhead platform, export pipeline system, shore approach, midstream pipeline and onshore control room.
Cemex and Vulcan Materials have reached a provisional agreement on Cemex's use of Vulcan's port facilities at Punta Venado in Playa del Carmen, a spokesperson for Cemex told Reuters.
DRILLERS
No significant news.
REFINERS
JPMorgan downgraded Marathon Petroleum to Neutral from Overweight.
As per SEC filing, Phillips 66 filed a pricing term sheet for $750 million 4.950% senior notes due 2027, $500 million 5.300% senior notes due 2033.
MLPS & PIPELINES
Lotus Midstream and its financial sponsor EnCap Flatrock Midstream announced they have signed a definitive agreement to sell Lotus Midstream to Energy Transferfor approximately $1.45 billion. The transaction is expected to close in the second quarter of 2023, subject to regulatory approval and customary closing conditions.
Truist Securities downgraded Williams Companies to Hold from Buy.
MARKET COMMENTARY
Easing concern about bank stability and re-introduction of interest rate risk pushed Treasury yields higher while U.S. stock index futures were subdued. European indices rose, helped by the banking and commodity stocks. Asian shares ended higher. Gold gained on a softer dollar and oil prices firmed on supply disruption risks from Iraqi Kurdistan.
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.
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