Oil Prices Rise as U.S. Demand Eclipses Omicron Concerns
SECTOR COMMENTARY:
Energy stocks are set to open higher, boosted by higher equities and rising oil prices. The Fed’s announcement yesterday to end its bond buying program lifted markets, as it was taken as a signal the economy has recovered from the depths of the pandemic.
Oil rose towards $75 on Thursday, supported by record U.S. implied demand and falling crude stockpiles, even as the spread of the Omicron coronavirus variant threatens to put a brake on consumption globally. Demand has been rising in 2021 after last year's collapse, and the EIA on Wednesday said product supplied by refineries, a proxy for demand, surged in the latest week to 23.2 million bpd. "These figures suggest a healthy economic backdrop," said Tamas Varga of oil broker PVM. "Although the Fed's announcement triggered a jump in both oil and equity prices, the withdrawal of economic support together with the Omicron crisis are the two major headwinds the oil market is currently facing," he added.
Natural gas futures rose almost 4% on Thursday to a near two-week high on forecasts for colder weather and higher heating use over the next two weeks, and as record gas prices in Europe and Asia keep demand for U.S. LNG exports strong. That price increase came despite near record U.S. gas production and ahead of a federal report expected to show mild weather last week, enabling utilities to remove less gas from storage than is usual for this time of the year.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
In February, energy groups ENGIE and Equinor announced an MoU to develop low carbon hydrogen projects together. Now the two companies move forward and announce the H2BE project which aims to develop production of low-carbon hydrogen from natural gas in Belgium.
Versalis, Eni's chemical company, and BTS Biogas, an Italian company in the building and managing sector of biogas plants, have agreed to develop and commercialise an innovative technology for the production of biogas and biomethane from residual lignocellulosic biomass.
Petrobras said it has decided to sell its stake in petrochemical producer Braskem SA through a follow-on share offering together with conglomerate Novonor, Reutersreported. Petrobras said that shares in Braskem are expected to migrate to "Novo Mercado" on the Sao Paulo stock exchange following the transaction.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Earthstone Energy announced that it has entered into an agreement to acquire the assets of privately held Chisholm Energy Holdings, located in the northern Delaware Basin of New Mexico. Chisholm is majority owned by Warburg Pincus, LLC and its affiliates. The aggregate purchase price of the Chisholm Acquisition is approximately $604 million consisting of $340 million in cash at closing, subject to customary closing adjustments, $70 million of deferred cash due over the 12 months after closing and approximately 19.4 million shares of Earthstone's Class A common stock valued at $194 million based on a closing share price of $9.98 on December 15, 2021.
(Late Wednesday) Western Midstream Partners, LP announced changes to the board of directors (the “Board”) of Western Midstream Holdings, LLC, its general partner (the “General Partner”), and to its management team, as well as the repurchase of WES common units from Occidental. In connection with his retirement from Occidental Petroleum Corporation (“Occidental”), Mr. Glenn Vangolen will resign from the Board effective December 17, 2021. Mr. Vangolen will be succeeded as chairman of the Board by Peter J. (Jeff) Bennett, a current WES Director and also President, U.S. Onshore Resources and Carbon Management, Commercial Development, at Occidental.
Talos Energy announced the appointment of Robin Fielder as the Company's first Executive Vice President Low Carbon Strategy and Chief Sustainability Officer. Under the newly created executive leadership role, Ms. Fielder will serve as the lead executive for Talos's rapidly growing carbon capture and sequestration business as well as oversee all ESG and sustainability initiatives and reporting.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Minerals Technologies announced that it has entered into two separate long-term agreements. The first agreement is to deploy ground calcium carbonate technology with Asia Symbol, a premier pulp, paper, and packaging company in China. The agreement with Asia Symbol provides high quality GCC supply to the first phase of their new coated paperboard mill in Rugao, Nantong City, Jiangsu Province, China, which is expected to commence operations in 2023. The second agreement is with Seshasayee Paper and Boards Ltd to build a 22,000 metric ton per year satellite precipitated calcium carbonate plant at SPB’s paper mill in Erode, Tamil Nadu, India.
DRILLERS
No significant news.
REFINERS
No significant news.
MLPS & PIPELINES
Enbridge removed to federal court a lawsuit filed by the state of Michigan's attorney general against the Line 5 oil pipeline, the company said in a statement, Reutersreported. The lawsuit opposing Enbridge's pipeline, part of a long-running effort by Michigan to halt Line 5 operations through the Straits of Mackinac in the Great Lakes, had originally been filed in state court.
Wells Fargo upgraded Equitrans Midstream to Overweight from Underweight and Holly Energy Partners, L.P. to Overweight from Equal Weight.
(Late Wednesday) Western Midstream Partners, LP announced changes to the board of directors (the “Board”) of Western Midstream Holdings, LLC, its general partner (the “General Partner”), and to its management team, as well as the repurchase of WES common units from Occidental. In connection with his retirement from Occidental Petroleum Corporation (“Occidental”), Mr. Glenn Vangolen will resign from the Board effective December 17, 2021. Mr. Vangolen will be succeeded as chairman of the Board by Peter J. (Jeff) Bennett, a current WES Director and also President, U.S. Onshore Resources and Carbon Management, Commercial Development, at Occidental.
MARKET COMMENTARY
Wall Street futures rose and world stocks marched back towards record highs as an upbeat economic outlook from the U.S. Federal Reserve powered global risk sentiment. Gold prices rose, boosted by a fall in the dollar after the Federal Reserve decided to cease its pandemic-era bond purchases early next year.
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.
This communication and the content found by following any link herein are being provided to you by Corporate Solutions, a business of Nasdaq, Inc. and certain of its subsidiaries (collectively, “Nasdaq”), for informational purposes only. Nasdaq makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Sources include Reuters, TR IBES, WSJ, The Financial Times and proprietary Nasdaq research.