Oil
Oil

Oil Prices Plunge on Growing Threat of Delta Variant to Demand

Energy and U.S. stock-index futures gained as equity markets stabilized after Monday’s rout, with investors weighing corporate earnings against the uncertain outlook for global growth.

SECTOR COMMENTARY:

Energy and U.S. stock-index futures gained as equity markets stabilized after Monday’s rout, with investors weighing corporate earnings against the uncertain outlook for global growth. Treasury yields edged lower, the dollar was steady and oil prices stabilized after yesterday’s 7% sell-off. 

In sector news, Apache and EOG Resources provided some 2Q updates while Haliburton reported better than expected profits. 

Oil prices plunged to an 8-week low yesterday on headlines about the fast spreading delta variant of Covid-19, which raised concerns about a prolonged hit to oil consumption amid renewed travel restrictions. Goldman Sachs Group Inc. said the delta variant may curb global oil demand by 1 million barrels a day for a couple of months, though that’s offset by a slow production ramp-up from OPEC+. However, not all analysts are as optimistic about the outlook for prices.

Natural gas prices are up moderately after posting their highest close in over 30 months yesterday amid warmer temperatures and rising LNG exports.

BY SECTOR:

INTERNATIONAL INTEGRATEDS

According to Reuters, Prysmian won order to provide 350 km of steel tube and thermoplastic electro-hydraulic umbilical to Petrobras in Brazil.

According to Reuters, Royal Dutch Shell confirmed it will appeal a Dutch court ruling ordering the energy company to accelerate its carbon emission reduction target.

According to Reuters, Sakhalin Energy expects to cut exports of liquefied natural gas to 166 cargoes this year from a record-high 178 in 2020 after recently launching its largest overhaul since opening in 2009, the Russian firm's CEO said. Sakhalin Energy stakeholders include Gazprom with a 50% stake plus one share, Royal Dutch Shellwith 27.5% minus one share, and Japanese firms Mitsui and Mitsubishi with 12.5% and 10%, respectively.

CANADIAN INTEGRATEDS 

Raymond James resumed coverage of Cenovus Energy at Market Perform.

Raymond James resumed coverage of Suncor Energy at Outperform.        

U.S. E&PS

APA provided the following adjustments to its expected production for the second-quarter 2021: Total Adjusted Production guidance increases to 342 Mboe/d, which reflects an increase in U.S. volumes to 241 Mboe/d from previous guidance of 230 Mboe/d, driven primarily by well performance in the Midland Basin and at Alpine High. Nearly half of this increase is attributable to oil volumes. Partially offsetting higher U.S. volumes, International adjusted production for the second-quarter 2021 is estimated at 101 Mboe/d, compared to 110 Mboe/d in the prior guidance, which is attributable to production sharing contract effects associated with higher realized oil prices in Egypt and extended maintenance downtime in the North Sea, including delays with third-party infrastructure returning online. 

Raymond James resumed coverage of Ovintiv at Market Perform.

CANADIAN E&PS

Credit Suisse terminated coverage of MEG EnergyNuVista EnergyVermillion EnergyParamount Resources and Baytex Energy.

Raymond James resumed coverage of MEG Energy at Outperform.

Raymond James resumed coverage of Ovintiv at Market Perform.

OILFIELD SERVICES

Fluor’s NuScale Power announced Doosan Heavy Industries and Construction has agreed to complete a cash investment in NuScale to continue to support deployment of its groundbreaking small modular reactor.

According to SEC filing, on July 19, 2021, Black Hills entered into a Fourth Amended and Restated Credit Agreement, among Black Hills Corporation, as Borrower, the financial institutions party thereto, as Banks, and U.S. Bank National Association, as Administrative Agent. The Restated Revolver extends the term from July 30, 2023 to July 19, 2026, with two one-year extension options (subject to consent from the lenders). The Restated Revolver also has an accordion feature that allows the Company to increase availability from $750 million to up to $1 billion with the consent of the administrative agent, the issuing agents and each bank increasing or providing a new commitment.

Halliburton Company announced net income of $227 million, or $0.26 per diluted share, for the second quarter of 2021. This compares to net income for the first quarter of 2021 of $170 million, or $0.19 per diluted share. Halliburton's total revenue for the second quarter of 2021 was $3.7 billion, compared to revenue of $3.5 billion in the first quarter of 2021. Operating income was $434 million in the second quarter of 2021 compared to operating income of $370 million in the first quarter of 2021.

MLPS & PIPELINES

Morgan Stanley downgraded TC Energy to Equal Weight from Overweight.

Morgan Stanley upgraded Western Midstream Partners to Overweight from Equal Weight.

MARKET COMMENTARY

Futures tracking Wall Street's main indexes rose, following a sharp sell-off in the previous session. European stocks steadied, helped by a handful of positive corporate earnings and production updates from miners. Japan's Nikkei fell to a six-month low, tracking a broad sell-off on Wall Street as concerns grew that rising coronavirus cases globally could derail a nascent economic recovery. Gold prices firmed, while the dollar was little changed. Oil edged up, as a tight physical market offset some concerns about the impact on demand from rising COVID-19 infections and higher OPEC+ supply. Building permits and housing starts numbers are expected on the U.S. economic calendar, later in the day. Netflix is scheduled to report after market.

NASDAQ ENERGY TEAM THOUGHT LEADERSHIP 


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