Oil Prices Rise on Supply Shortages After Earthquake in Turkey Causes Major Export Terminal Shutdown
SECTOR COMMENTARY:
The energy sector is pointing to a higher start, supported by strength in the underlying commodities while major equity futures steadied as investors braced for the latest commentary from the Fed Chair later today.
Earnings season continued to heat up today with BP the latest major to report record annual profits, results that more than doubled last year’s total. The company also announced a further $2.75 billion share buyback, which it expects to complete prior to announcing its first-quarter 2023 results in early May and boosted its dividend by 10% to 6.61 cents per ordinary share. NOV is also making headlines this morning as the latest OFS to report 4Q results that beat analyst expectations.
WTI and Brent oil futures continued to rise for a second-straight session, driven by optimism about recovering demand in China and concerns over supply shortages following the shutdown of a major export terminal after an earthquake in Turkey. The IEA announced they expect half of this year's global oil demand growth to come from China, adding that jet fuel demand was surging. Saudi Arabia raised prices for its crude for Asian buyers for the first time in six months amid expectations of demand recovery, especially from China. Operations at Turkey's 1 bpd oil export terminal in Ceyhan were halted following the earthquake. The BTC terminal is expected to be closed between Feb. 6-8. The shutdown of the 535,000-bpd Phase 1 part of the Johan Sverdrup oilfield in Norway's area of the North Sea also boosted prices.
Natural gas futures added to yesterdays’ rebound and are up a further ~3% so far this morning, backed by forecasts for colder weather and higher heating demand which is expected later this month.
BY SECTOR:
US INTEGRATEDS
Chevron Phillips Chemical, a petrochemical company jointly owned by Chevron and Phillips 66, deepened collaboration with Nexus Circular, securing contracted long-term supply of advanced recycled plastic feedstocks from new facility.
Eni could take over Chevron's stake in and operatorship of the Indonesia Deepwater Development (IDD) gas project by mid-2023, a senior Indonesian energy ministry official said on Tuesday.
Chevron Australia announced the company will contribute A$38 million to carbon capture and storage research projects in Australia.
The initial startup of a new crude distillation unit at Exxon Mobil 369,024 barrel-per-day (bpd) Beaumont, Texas, refinery is delayed until repairs are completed on a hydrotreater, sources familiar with plant operations said on Monday.
INTERNATIONAL INTEGRATEDS
Aramco Trading's chief executive said the company was currently trading 6 million barrels per day of crude and products. Saudi Aramco and other Middle East oil producers stepped up their trading efforts as a way to boost income after the 2014 collapse in oil prices.
BP reported a record profit of $27.6 billion in 2022 which was lifted by a surge in energy prices since Russia's invasion of Ukraine as the company also boosted its dividend by 10%. BP's fourth-quarter underlying replacement cost profit, the company's definition of net income, reached $4.8 billion, compared with forecasts of a $5 billion profit in a company-provided survey of analysts. That compared with $4 billion a year earlier and $8.2 billion in the third quarter of 2022. But for the year, BP's $27.6 billion profit exceeded its previous record of $26 billion in 2008 despite a $25 billion writedown of its Russian assets. That allowed it to boost its dividend by 10% to 6.61 cents per share, after halving it in the wake of the pandemic, and announce plans to repurchase $2.75 billion worth of shares over the next three months after buying $11.7 billion in 2022.
BP said in a strategy update it planned by 2030 to spend around $8 billion a year on its oil and gas business and the same amount on its energy transition businesses out of a total of up to $18 billion.
TotalEnergies said the shipping of products from its French sites was interrupted due to a strike action launched over the government's pensions reform plans.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Carbon TerraVault Holdings, LLC (CTV), a subsidiary of California Resources Corporation announced it has assembled a consortium of organizations across industry, technology, academia, national labs, community, government, and labor, to pursue U.S. Department of Energy (DOE) funding under its Regional Direct Air Capture (DAC) Hubs Initiative to create the California DAC Hub, the state’s first full-scale DAC plus storage (DAC+S) network of regional DAC+S hubs. DAC+S is a solution that can remove and then permanently store atmospheric carbon dioxide (CO2) using low carbon emission energy and provide economic benefits to surrounding communities.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
NOV reported fourth quarter 2022 revenues of $2.07 billion, an increase of 10 percent compared to the third quarter of 2022 and an increase of 37 percent compared to the fourth quarter of 2021. Net income for the fourth quarter of 2022 was $104 million, or 5.0 percent of sales. Operating profit was $162 million, or 7.8 percent of sales. Under Other Items the Company recorded a net pre-tax credit of $8. Adjusted EBITDA increased sequentially to $231 million, or 11.1 percent of sales.
Raymond James downgraded Enerflex to Outperform from Strong Buy.
DRILLERS
No significant news.
REFINERS
No significant news.
MLPS & PIPELINES
Frontline plc, formerly Frontline Ltd., announced that the Emergency Arbitration claims filed by Euronav have been fully dismissed by the Emergency Arbitrator.
Bernstein downgraded Plains All American Pipeline to Market Perform from Outperform.
MARKET COMMENTARY
U.S. stock index futures were little changed ahead of a speech by Federal Reserve Chair Jerome Powell later in the day. European shares edged higher, with bumper profits from BP lifting energy stocks. In Asian equities, Chinese blue chips ended slightly higher as some investors bought the dip after a three-session slide and Japan's Nikkei index pared gains to inch lower. Oil prices extended gains on optimism about recovering demand in China and supply worries after an earthquake in Turkey. The dollar pared losses against its major peers, while gold prices steadied. Trade balance numbers are due later in the day.
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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