Oil Recovers Yesterday’s Losses Amid Supply Concerns
SECTOR COMMENTARY:
The energy sector is set for a higher start, supported by strength in the underlying commodities and the major equity futures which are trading higher this morning as investors become more optimistic about a soft-landing ahead of inflation data due later this week.
WTI and Brent crude oil futures are recovering yesterday’s losses on supply concerns stemming from low Cushing stockpiles which are at their lowest levels in 14 months and high demand. The drop in Cushing inventories has traders and analyst worried this may affect the quality of remaining oil and are focused on the potential for the storage hub to fall below minimum operating levels. In 2014, the last time Cushing levels fell below 20 million barrels, consequences were avoided as stocks quickly rebuilt. However, market participants are concerned as the U.S. was not a crude oil exporter then due to a 40-year export ban. Traders will be keying on today’s EIA data, with last night’s API figures showed a 1.698-million-barrel build in crude stocks.
Natural gas futures are trading higher ahead of the expiry of the front-month contract, and despite forecasts for milder weather through October.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
Eni is in talks with a strategic partner to sell a stake in its low carbon unit Plenitude, the CEO of the Italian energy group Claudio Descalzi said, adding that an initial public offering (IPO) would follow. Descalzi told an energy conference in Milan the deal would help to set an overall value for Plenitude, which he said showed growth in all of its businesses.
Britain has given the go-ahead for one of its biggest new oil and gas projects in years, Equinor's North Sea Rosebank field, saying energy security was the priority despite opposition from environmentalists. The announcement comes after Prime Minister Rishi Sunak watered down interim plans for the government's 2050 net zero emissions target, a move that critics said could also encourage other countries to rein in their climate ambitions. Energy Security Minister Claire Coutinho said Rosebank would be less emissions-intensive than older oil and gas developments.
Equinor signed a five-year agreement to supply gas to Austria's OMV (OMVV.VI) as part of the latter's supply diversification strategy, the companies said. Equinor will deliver 12 terawatt hours (TWh) of natural gas starting on Oct. 1, the beginning of the European gas winter season, adding to volumes under existing contracts, the companies said.
Jiangsu Eastern Shenghong said it had entered a preliminary deal with Saudi Aramcofor the Middle Eastern oil major to become a minority stakeholder in its refining and petrochemical unit. Under a framework agreement, Saudi Aramco intends to become a strategic investor in Jiangsu Shenghong Petrochemical, which operates a refinery and petrochemical complex in the eastern province of Jiangsu.
MRC Global announced that its subsidiary, MRC Global (US) Inc. has extended its Enterprise Framework Agreement with Shell plc. until 2028.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Ovintiv announced it has received regulatory approvals for the renewal of its share buy-back program. This action is consistent with the Company's capital allocation framework, which returns at least 50 percent of post base dividend Non-GAAP Free Cash Flow to shareholders.
Stephens initiated coverage of Crescent Energy with Overweight rating.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Oceaneering International announced the expiration and results of the previously announced cash tender offer to purchase any and all of its outstanding 4.650% Senior Notes due 2024. The cash tender offer was announced on September 20, 2023 and was made pursuant to the Offer to Purchase dated September 20, 2023 and the related Notice of Guaranteed Delivery.
DRILLERS
No significant news.
REFINERS
No significant news.
MLPS & PIPELINES
No significant news.
MARKET COMMENTARY
Futures tracking Wall Street's main indexes rose as retreating Treasury yields boosted megacaps, while investors awaited developments on a U.S. funding bill and inflation data releasing this week. European shares ticked up supported by industrials and tech stocks. Japan's Nikkei share average closed higher, rebounding from a one-month low. Oil prices climbed as markets focused on supply tightness heading into winter. The dollar touched a 10-month high, while gold prices plummeted to its lowest in a month.
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 Rich Pontillo.
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Nasdaq Advisory Services Energy Team is part of Nasdaq's Advisory Services. 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.
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