Oil Prices Rise Supported by Economic Recovery, Prospects of Fuel Demand Growth
SECTOR COMMENTARY:
Energy stocks are poised for a mixed to higher start, backed by gains in the crude complex while the broader index futures seesawed between gains and losses. Growth is expected to outpace value as the yield on the 10-year note continues its decline. In sector news, reports over the weekend stated that Shell could sell part or all of it’s position in the Permian Basin as it is faced with pressures to cut carbon emissions. The Permian accounts for 6% of Shell’s total oil and gas output in 2020, the article stated.
Oil prices rose in overnight trading, hitting their highest levels in more than two years supported by economic recovery and the prospect of fuel demand growth as vaccination campaigns in developed countries accelerate. Motor vehicle traffic is returning to pre-pandemic levels in North America and much of Europe, and more planes are in the air as anti-coronavirus lockdowns and other restrictions are being eased, driving three weeks of increases for the oil benchmarks. On the supply side, heavy maintenance seasons in Canada and the North Sea also helped prices stay high.
Natural gas is down 0.1% to $3.294 following a 4.6% gain on Friday after the Texas Eastern Pipeline Company announced that it expects a 20% pressure reduction in its major line to last through at least the summer. Forecast expects above-seasonal temps for all East Coast states (ex-NY, PA) and the Western half of the Lower 48 above-seasonal. Everywhere else is expected to be seasonal or below seasonal.
No significant news.
According to Reuters, BP will join Norway's Statkraft and Aker Offshore Wind to bid for permits to build offshore wind power projects off Norway, the companies said. The consortium in which each partner will have a 33.3% stake plans to bid for offshore wind power projects in the Soerlige Nordsjoe II licensing area in the southern part of the North Sea, one of the two areas opened in Norway.
Eni through Vår Energi, jointly owned by Eni (69.85%) and by HitecVision (30.15%) announced a new oil discovery in production licence 554 in the North Sea by drilling the exploration well34/6-5S in the Garantiana West prospect. The well targeted a neighbouring fault block of the Garantiana discovery, and is located 30 km north of the Snorre Field, in a water depth of 385 m. The well was drilled with the semi- submersible drilling rig West Hercules.
Petroleo Brasileiro SA said that its Chinese partners in the Buzios pre-salt oil field will have to pay it $2.94 billion for its investment in exploration under the TOR rights to surplus oil found there. Petrobras said in a securities filing that Brazilian oil regulator ANP still has to approve the estimates of payment by China National Offshore Oil Corp and China National Oil and Gas Exploration and Development Corp, which have a 10% stake in the surplus output of the productive Santos basin field.
Petroleo Brasileiro SA informed BR Distribuidora of its plans to sell its remaining 37.5% stake in a follow-on public offering, Petrobras said in a filing.
According to Reuters, Repsol hired banks to present a new transition financing framework to investors that will allow the company to issue sustainability-linked bonds, according to a lead manager
Royal Dutch Shell is reviewing its holdings in the largest oil field in the United States for a possible sale as the company looks to focus on its most profitable oil-and-gas assets and grow its low-carbon investments, according to Reuters. The sale could be for part or all of Shell's position in the U.S. Permian Basin, located mostly in Texas. The holdings could be worth as much as $10 billion, the sources said, on condition of anonymity because the talks are private. Shell declined to comment.
Six top western energy firms are vying to partner in the vast expansion of Qatar's liquefied natural gas output, industry sources said, helping the Gulf state cement its position as the leading LNG producer while several large projects around the world recently stalled. Exxon Mobil, Royal Dutch Shell, TotalEnergies and ConocoPhillips, which are part of Qatar's existing LNG production were joined by new entrants Chevron and Eni in submitting bids on May 24 for the expansion project, industry sources told Reuters.
No significant news.
Comstock Resources announced that, subject to market conditions, it intends to offer a new series of senior notes due in 2030 in a private placement to eligible purchasers. Comstock intends to use the net proceeds from this offering to fund the redemption of a portion of the Company's 9.75% Senior Notes due 2026 and to pay related fees and expenses.
Earthstone Energy announced that it has acquired working interests in assets it operates located in southern Gonzales County, Texas from four separate sellers. The aggregate purchase price of the Eagle Ford Acquisitions was approximately $48 million in cash. Earthstone funded the Eagle Ford Acquisitions with cash on hand and borrowings under its senior secured revolving credit facility. The effective date of the Eagle Ford Acquisitions was April 1, 2021. The largest of the acquisition components, comprised of working interests owned by two affiliates of Titanium Exploration Partners, LLC, constituted the majority of the total consideration.
No significant news.
Block Energy signed an MoU with Baker Hughes. The MoU envisages multiple service awards for advanced oil and gas technology across a production-led, multi-well drilling programme. The initial project will drill a horizontal well targeting a recoverable volume estimated to be 2.1 MMboe at the WR-BA well target location in West Rustavi.
Citi downgraded Core Laboratories to Sell from Neutral.
KBR announced it has been awarded a contract to provide INSITE monitoring and advisory services for three years to Iowa Fertilizer Company's plant at Wever, Iowa.
No significant news.
No significant news.
Goldman Sachs upgraded Cheniere Energy Partners to ‘Buy’ from ‘Neutral’ and downgraded Kinder Morgan to ‘Sell’ from “Neutral’.
Raymond James upgraded DCP Midstream to ‘Strong Buy’ from ‘Outperform’ and upgraded EnLink Midstream to ‘Outperform’ from ‘Market Perform’.
Wall Street futures rose as focus shifted to the Federal Reserve's meeting this week, where the central bank is expected to maintain its accommodative stance on monetary policy. European shares were in the green. Japanese shares ended higher as cyclicals such as tyre makers and shippers led gains on global recovery hopes. The dollar edged lower. Gold prices fell. Oil prices rose supported by the prospect of fuel demand as vaccination campaigns in developed countries accelerate.
NASDAQ ENERGY TEAM THOUGHT LEADERSHIP
- 5/19/21 –VIDEO: Energy Sector Catalysts
- 5/17/21 – VIDEO: Oil prices could become ‘a little disjointed’: Nasdaq Analyst
- 2/18/21 – VIDEO: Why the Texas energy crisis may send gasoline prices higher
- 2/17/21 – VIDEO: Texas Freeze Hits Oil Supply
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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Other Topics
Energy Commodities Nasdaq Advisory Services
MarketInsite
Nasdaq’s Marketinsite offers actionable insights on a variety of market-moving topics. Learn from our thought leaders who are driving the capital markets of tomorrow.
Read MarketInsite's Bio