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Oil Prices Rise as Supply Crunch in Natural Gas, Electricity, Coal Continue

Oil prices continued to rise as a supply crunch in natural gas, electricity and coal continued across the globe while falling temperatures in China revived concerns over whether the world's biggest energy consumer can meet domestic demand for heating.

SECTOR COMMENTARY:

Energy stocks are poised for a higher start, backed by gains in the crude complex and the broader index futures which have extended their recent trend higher. In sector news, Halliburton kicked off earnings season this morning, posting its third quarterly profit as a jump in oil prices and drilling activity boosted demand for its services and equipment. 

Oil prices continued to rise as a supply crunch in natural gas, electricity and coal continued across the globe while falling temperatures in China revived concerns over whether the world's biggest energy consumer can meet domestic demand for heating. "In a bull market it is usually Brent that leads the way higher, but this time around (U.S.) domestic issues provide extra support for WTI," said Tamas Varga, oil analyst at London brokerage PVM Oil Associates.

Natural gas is down 2.4% to $4.870, after yesterday's 7.8% drop as forecasts for the last week of October and the start of November predict above-seasonal temperatures for a large majority of the Lower 48, limiting upper-Midwest and Northeast heating demand. Henry Hub is a penny below its 50 DMA, a level it hasn't closed below since April.  

BY SECTOR:

US INTEGRATEDS 

No significant news.

INTERNATIONAL INTEGRATEDS

Lightsource bp secured its first projects in Poland through a 757MWp co-development deal.  This agreement demonstrates the shifts in Poland’s dynamic power market as the country accelerates towards renewable energy sources and away from coal. The total capex to bring the entire pipeline to fruition could reach €500 million. Lightsource bp has closely vetted the portfolio, providing valuable insight into the potential of the projects and the Polish solar market. Around half the projects could be ready for construction in 2022. 

Eni and Fincantieri have signed a Memorandum of Understanding (MoU) to establish a partnership for promoting initiatives focused on the energy transition. The aim is to create a system of integrated solutions for decarbonization projects in the fields of energy, transport and the circular economy. 

CANADIAN INTEGRATEDS 

No significant news.

U.S. E&PS 

Kosmos Energy announced that, subject to market conditions, it intends to offer $400 million aggregate principal amount of senior notes due 2027. Kosmos intends to use the net proceeds from the offering, together with cash on hand, to refinance the $400 million aggregate principal amount of private placement notes the Company issued to fund its acquisition of Anadarko WCTP Company. 

RBC upgraded Ranger Oil to Outperform from Sector Perform.

RBC initiated coverage in Callon Petroleum with a ‘Sector Perform.'

TechnipFMC and Talos Energy announced that they have entered into a long-term strategic alliance to develop and deliver technical and commercial solutions to Carbon Capture and Storage projects along the United States Gulf Coast. The alliance combines Talos’s offshore operational strength and sub-surface expertise with TechnipFMC’s extended history in subsea engineering, system integration and automation and control.

W&T Offshore provided an operational update. Relative to previously reported production for the second quarter of 2021, approximately 80% of the Company’s production was shut-in at one point as a result of Hurricane Ida. The majority of the impacted production was brought back online throughout September. As a result of this downtime, based on preliminary estimates, net production for the third quarter is expected to average between 34,200 and 35,100 barrels of oil equivalent per day (“Boe/d”) (34% oil, 11% natural gas liquids, and 55% natural gas). Production for the fourth quarter is expected to average between 34,800 and 38,500 Boe/d (33% oil, 11% natural gas liquids, and 56% natural gas), which assumes the Big Bend and Dantzler wells are returned to production by the end of October as expected. The remaining hurricane-impacted production is expected to be online by the end of 2021. Through October 16, 2021, W&T estimates that it has averaged approximately 35,900 Boe/d net for the month of October. Unplanned costs for minor repairs and restoring production, as well as evacuating employees and contractors, were incurred as a result of the hurricane. Due to these costs, less than anticipated Office of Natural Resources Revenue credits, and slight increases to components of base lease operating expense guidance for LOE is now expected to be between $174 and $180 million for 2021.

CANADIAN E&PS

Vermilion Energy announced the appointment of Mr. James J. Kleckner Jr. to its Board of Directors.

OILFIELD SERVICES 

The Board of Directors of Enerflex announced the appointment of Ms. Mona Hale as a director of Enerflex.

Halliburton announced net income of $236 million, or $0.26 per diluted share, for the third quarter of 2021. This compares to net income for the second quarter of 2021 of $227 million, or $0.26 per diluted share. Adjusted net income for the third quarter of 2021, excluding special items, was $248 million, or $0.28 per diluted share. Halliburton's total revenue for the third quarter of 2021 was $3.9 billion compared to revenue of $3.7 billion in the second quarter of 2021. Reported operating income was $446 million in the third quarter of 2021 compared to reported operating income of $434 million in the second quarter of 2021. Excluding special items, adjusted operating income was $458 million in the third quarter of 2021.

Weatherford International announced that ForeSite Edge was named winner of a 2021 Hart Energy Special Meritorious Award for Engineering Innovation (MEA) in the Artificial Lift category. The MEA honor places ForeSite Edge among the year's best new innovations with game-changing technical and economical significance for the upstream petroleum industry.

DRILLERS

No significant news.

REFINERS

No significant news.

MLPS & PIPELINES

Plains All American announced that CME Group will add Plains’ Cushing Terminal as a delivery point to the NYMEX WTI Crude Oil Futures contract, offering market participants an additional outlet to utilize the delivery mechanism of the world’s most liquid crude oil futures benchmark. The change will take effect November 8th, 2021 for the February 2022 contract month, pending regulatory review. 

Barclays upgraded Shell Midstream Partners to Overweight from Equal Weight and downgraded Holly Energy Partners to Equal Weight from Overweight.

MARKET COMMENTARY

U.S. stock index futures were in the green, mirroring world stocks which climbed to a one-month high as a rally in technology shares and prospects of solid corporate earnings helped counter concerns about elevated inflationary pressures. Gold advanced as a weaker dollar and lower U.S. Treasury yields supported prices and lifted bullion's appeal. Oil prices rose as a supply crunch in natural gas, electricity and coal continued across the globe while falling temperatures in China revived concerns over whether the world's biggest energy consumer can meet domestic demand for heating. 

NASDAQ ENERGY TEAM THOUGHT LEADERSHIP


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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