Oil Steadies Amid Potential Pause in U.S. Interest Rate Hikes
SECTOR COMMENTARY:
Energy stocks will open modestly higher, attempting to rebound from recent selling as trading in June commences. Broader futures were initially higher, but ticked slightly into the red following stronger than expected May payrolls data, which keeps the Fed live at its next meeting for another potential rate hike. Other than a handful of recommendation changes in Exxon, Chevron and Phillips 66, sector news flow is light.
Oil steadied on Thursday as a potential pause in U.S. interest rate hikes and the passing of a crucial vote on the U.S. debt ceiling bill were offset by a report of rising inventories in the world's biggest oil consumer. U.S. Federal Reserve officials on Wednesday suggested interest rates could be kept on hold this month and the U.S. House of Representatives passed a bill suspending the government's debt ceiling, improving the chance of averting a disastrous default.
Natural gas futures are lower by 3% to start June as milder than normal weather and buoyant production weigh on futures.
BY SECTOR:
US INTEGRATEDS
Brightmark RNG Holdings LLC is positioned to expand renewable natural gas (RNG) production with five new anaerobic digestion dairy farm projects in western Michigan, designed to convert animal waste to renewable fuels.Brightmark RNG Holdings LLC is a joint venture between Chevron U.S.A. Inc., a subsidiary of Chevron, and Brightmark Fund Holdings LLC, a subsidiary of Brightmark LLC. The Chevron-Brightmark renewable natural gas joint venture operates a nationwide system of RNG joint venture projects.
ExxonMobil signed carbon capture agreement with Nucor Corporation, reaching 5 MTA milestone.
RBC downgraded ExxonMobil to Sector Perform from Outperform and upgraded Chevron to Outperform from Sector Perform.
INTERNATIONAL INTEGRATEDS
Aramco dropped June official selling prices (OSPs) for liquefied petroleum gas (LPG) by 17-20% compared to May due to ample LPG supply in the international market, traders said.
Eni is investing in farming in several African and Asian countries as it aims to produce by itself around one fifth of the agricultural feedstock it will need for its biofuel business by 2025, two top executives at the energy group said.
Petrobras said its board of directors had approved a revision to its 2023-2028 strategic plan in a bid to increase investments in low-carbon initiatives.
Petrobras informed that it started the production of the FPSO Almirante Barroso platform, in the Búzios field, with capacity to produce daily up to 150 thousand barrels of oil and 6 million m³ of gas. FPSO Almirante Barroso will contribute to the oil production of the Búzios field, which currently averages 560,000 barrels per day, equivalent to about 17% of national production.
Jeanine Wai is appointed Vice President Investor Relations for North America of TotalEnergies, effective June 1, 2023. She replaces Robert Hammond who elected to retire from the Company.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
No significant news.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Shawcor announced that its pipe coating division, Pipeline Performance Group (“PPG”), has received five formal contract awards and one letter of intent (“LOI”) for development projects in South America, Mexico and the Ivory Coast.
TETRA Technologies entered into the Third Amendment to Bromine Requirements Sales Agreement with LANXESS Corporation. The Amendment has an effective date of April 1, 2023 and was entered into in connection with the entry into a settlement agreement in the Company's arbitration with LANXESS. The Amendment provides for, among other things, revised volume requirements and related terms.
DRILLERS
Noble announced changes to its share capital. During the month of May, Noble has repurchased approximately USD 33 million of A ordinary shares under its previously announced share repurchase plan at a weighted average price of approximately USD 38.40 per A ordinary share. All of these A ordinary shares have been, or will be, cancelled.
Precision Drilling provided an update on its North American drilling operations. In Canada, we have 46 rigs active today and expect to have over 60 rigs active by the end of the month as we begin to emerge from the lows of spring breakup. To date, the wildfires in Alberta and British Columbia have had a modest impact on our operations and we expect second quarter activity to average approximately 42 rigs, a 14% increase over last year.
REFINERS
TD Cowen upgraded Phillips 66 to Outperform from Market Perform.
MLPS & PIPELINES
DHT Holdings announced that it has entered into an agreement to acquire a VLCC built in 2018 at Hyundai Heavy Industries (HHI) for USD 94.5 million. The vessel is scheduled to deliver during the third quarter of 2023. The Company will finance the acquisition with available liquidity and projected mortgage debt, and it is expected to be accretive to DHT’s earnings per share. It was built to a high specification by its current owner, is fitted with an exhaust gas cleaning system and will further improve the DHT fleet efficiencies, amongst others its Annual Efficiency Ratio (AER) and Energy Efficiency Operational Index (EEOI) metrics.
Kinder Morgan announced its plan to expand the working gas storage capacity at its Markham Storage facility (Markham) in Matagorda County along the Texas Gulf Coast. KMI has reached an agreement with Underground Services Markham, LLC, a subsidiary of Texas Brine Company LLC, to lease an additional cavern at Markham to provide more than 6 billion cubic feet (Bcf) of incremental working gas storage capacity and 650 million cubic feet per day (MMcf/d) of incremental withdrawal capacity on KMI’s extensive Texas intrastate pipeline system. Anchor shippers have subscribed to approximately half of the available capacity under long-term agreements, and commercial in-service for the project is expected in January 2024.
Scorpio Tankers announced that it has recently purchased 851,978 of its common shares in the open market at an average price of $46.74 per share as part of the Company’s securities repurchase program. The Company currently has 55,331,704 common shares outstanding.
MARKET COMMENTARY
U.S. stock futures were up after the House of Representatives passed a bill to suspend the nation's debt ceiling. European shares rose as investors awaited regional inflation data for clues on how much longer the ECB will hike interest rates. Japan's Nikkei closed higher as investors scooped up stocks after losses in the previous session. The dollar edged lower as investors trimmed bets the Federal Reserve will raise interest rates this month, while gold was little changed.
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
Commodities Energy
MarketInsite
Nasdaq
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