Oil Steadies as Supply Concerns Begin to Fade
SECTOR COMMENTARY:
The energy sector is poised for a mixed to higher start, backed by additional strength in the major equity futures but optimism is being capped by mild weakness in the crude complex.
WTI and Brent crude oil futures steadied this morning following yesterday’s nearly 2% run, pausing as supply concerns began to fade after the U.S. announced the creation of a task force to safeguard Red Sea commerce from Yemeni militants. The United Kingdom, Bahrain, Canada, France, Italy, Netherlands, Norway, Seychelles and Spain are among nations involved in the operation. Further weakness in the greenback this morning is helping to support prices. Focus is starting to shift to the next round of inventory data which analyst expect to show U.S. crude inventories declined by 2.2 million barrels last week.
Natural gas futures turned lower this morning following four-consecutive days of strong gains, pressured by updated forecasts calling for more mild weather in key consuming regions than previous expected.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
A number of container ships are anchored in the Red Sea and others have turned off tracking systems as traders adjust routes and prices in response to maritime attacks by Yemen's Iran-aligned Houthis on the world's main East-West trade route. Attacks in recent days on ships in the major Red Sea shipping route have raised the spectre of another bout of disruption to international commerce following the upheaval of the COVID pandemic, and prompted a U.S.-led international force to patrol waters near Yemen. The Red Sea is linked to the Mediterranean by the Suez Canal, which creates the shortest shipping route between Europe and Asia. About 12% of world shipping traffic transits the canal. Major shippers including Hapag Lloyd, MSC and Maersk, oil major BP and oil tanker group Frontline have said they will be avoiding the Red Sea route and re-routing via southern Africa's Cape of Good Hope.
BP's board has short-listed interim CEO Murray Auchincloss and two senior female executives as internal candidates to replace Bernard Looney as chief executive, three company and industry sources told Reuters.
Equinor and Germany's SEFE enter long-term gas sales agreements and pursue large scale hydrogen supplies. Under the agreements Equinor will supply Germany's state-owned energy company SEFE (Securing Energy for Europe) with 111 terrawatt hours (ca 10 billion cubic meters - bcm) of natural gas per year from 1 January 2024 until 2034, plus an option for another 5 years, at terms reflecting market prices. The annual volumes are equivalent to one third of German industrial demand. The 5-year option is for a total of 319 TWh (around 29 bcm) over the period. The companies also signed a non-binding letter of intent (LoI) with the intention that SEFE will become a long term off-taker of giga-scale, low-carbon hydrogen supplies from Equinor starting in 2029 and continuing towards 2060.
After a first renewable Corporate Power Purchase Agreement (CPPA) signed at the end of 2022, TotalEnergies signed a second contract with LyondellBasell to supply a combined 275 MWac (358 MW) of green electricity sourced from its utility-scale Cottonwood Bayou and Brazoria Solar farms in Texas: Through the newly signed 15-year CPPA, LyondellBasell will offtake 125 MWac (163 MW) from TotalEnergies' Brazoria Solar farm, located southwest of Houston, with a capacity of 325 MW and a commercial start-up planned for end of 2025. Through the 12-year CPPA signed in 2022, LyondellBasell will offtake 150 MWac (195 MW) from TotalEnergies' Cottonwood Bayou Solar plant, a project located south of Houston, with a capacity of 455 MW and a commercial start-up planned for end of 2024.
Patrick Pouyanné, Chairman and CEO of TotalEnergies, met in Abuja with Bola Ahmed Tinubu, President of the Federal Republic of Nigeria, to reaffirm the long-term partnership between TotalEnergies and Nigeria. Over the past decade, TotalEnergies has been the largest private energy investor in the country, developing major projects such as Egina, Ofon Phase 2, the OML 58 Upgrade, and recently Ikike, which started in 2022.
RBC downgraded Equinor ASA to Sector Perform from Outperform.
CANADIAN INTEGRATEDS
Imperial provided an update on its corporate guidance outlook for 2024. The company’s strategy remains focused on maximizing value of existing assets and progressing select high-value growth opportunities while continuing to reduce company emissions and delivering industry-leading returns to shareholders. Capital spending is forecast at $1.7 billion. In the Upstream, production is forecast to be between 420,000 and 442,000 gross oil equivalent barrels per day. This reflects the multi-year volume growth and cost optimization journey at Kearl to profitably deliver annual production of 280,000 total gross barrels per day, as well as the accelerated ramp-up of the first phase of the Grand Rapids (GRP1) project at Cold Lake. In the Downstream, throughput is forecast to be between 385,000 and 400,000 barrels per day with capacity utilization between 89% and 92%. The company is planning to complete turnarounds at all three of its refineries in 2024, which includes scope to enable the co-processing of vegetable oils alongside conventional feedstock at Strathcona refinery.
U.S. E&PS
Permian Resources announced the commencement of an underwritten public offering of an aggregate 39,414,415 shares of its Class A Common Stock, par value $0.0001 per share, by certain affiliates of NGP Energy Capital Management L.L.C., Riverstone Investment Group LLC and EnCap Investments L.P..
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
No significant news.
DRILLERS
Nabors Industries issued the following statement today from Chairman, President and CEO Anthony G. Petrello regarding the closing of the previously announced business combination between Nabors Energy Transition Corporation ("NETC"), the special purpose acquisition company (SPAC) sponsored by Nabors, and Vast Renewables Limited ("Vast"). The combined company now trades on the NASDAQ exchange under the ticker symbol "VSTE." "The challenge for traditional solar power is the need to provide 24/7, baseload dispatchable power safely and cost effectively. Vast solves these issues with its advanced concentrated solar thermal power (CSP) v3.0 technology. Nabors sponsored NETC as a capital efficient way to pursue significant investment opportunities supporting the energy transition. We are pleased that the business combination between NETC and Vast has been completed. Vast's innovative and proven CSP energy systems deliver clean, dispatchable power and heat for utility-scale power generation, green fuels production and industrial process heat applications. Overcoming the traditional challenges of renewables, Vast holds the potential to deliver clean baseload power and decarbonize aviation, heavy industry and other hard-to-abate sectors. With the addition of Vast to Nabors' broader technology portfolio, we believe we are closer to the vision for clean, renewable, scalable, affordable and dispatchable energy – the type of energy the world needs.”
REFINERS
According to Reuters, HF Sinclair announced that company entered into a stock purchase agreement with REH company. Post stock purchase deal co agreed to repurchase from REH company 894,454 shares of co's outstanding common stock. Price per share to be paid by company under stock purchase agreement is $55.90 per share. Purchase price for deal will be funded with cash on hand.
Stifel downgraded Vertex Energy to Hold from Buy.
MLPS & PIPELINES
No significant news.
MARKET COMMENTARY
U.S. stock index futures edged higher as Treasury yields slipped ahead of economic data this week that could offer insights on when the Federal Reserve could start cutting interest rates. European shares slipped with automobile and luxury stocks leading losses. Japan's Nikkei share average ended lower as cautious investors awaited hints from the Bank of Japan (BOJ) Governor Ueda for a possible shift in its ultra-low rates policy. Gold prices were little changed as the dollar remained steady. Oil prices rose on supply disruption worries arising from Houthi attacks on Red Sea ships and Russia's plan to lower exports in December.
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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