Oil Trading Higher After U.S. Debt Ceiling Deal Averted Default
SECTOR COMMENTARY:
The energy sector is poised for a higher start, supported by strength in the underlying commodities and in the major equity futures. U.S. stock index futures extended gains after data showed a slight cooling in average hourly wages and a small rise in unemployment in May, reinforcing bets that the Federal Reserve will skip raising interest rates again in June. The Labor Department's closely watched employment report, showed unemployment rate at 3.7% in May against a forecast of 3.5%, while hourly average wages were at 0.3%, down from a 0.4% in April, highlighting a cooling in wage inflation. Meanwhile, non-farm payrolls increased by 339,000 jobs vs. expectations of 190,000 additions.
WTI and Brent crude oil futures are trading higher for the second-consecutive session after a U.S. debt ceiling deal averted a default in the world's biggest oil consumer, while attention turned to a meeting of OPEC ministers and their allies on June 4th. Markets were reassured by a bipartisan deal to suspend the limit on the U.S. government's $31.4 billion debt ceiling, which staved off a sovereign default that would have rocked global financial markets. Earlier signals of a potential pause in rate hikes by the Federal Reserve also provided support to oil prices.
Natural gas futures are rebounding as the NOAA's 6-10 day outlook shows above-normal temps from the Pacific NW to the Northern Plains, while below-normal temps are likely across the Southwest into the Southern Plains and most of the Eastern Seaboard.
BY SECTOR:
US INTEGRATEDS
According to WSJ, Exxon and Chevron near deals to drill in gas-rich Algeria.
Exxon Mobil Chief Executive Darren Woods said he aims to double the amount of oil produced from the company's U.S. shale holdings over a five-year period using new technologies.
INTERNATIONAL INTEGRATEDS
Equinor said it aims to restart production at the Statfjord A oil and gas platform in the North Sea next week, after it was shut down on May 25 due to a hydrogen sulfide gas leak.
The Arctic Aurora tanker is currently loading up at the Arctic Hammerfest liquefied natural gas (LNG) plant despite production being shut down, operator Equinor said on Friday.
In accordance with its policy in favour of employee shareholding, the Board of Directors of TotalEnergies decided, on September 22, 2022, to carry out a capital increase reserved for eligible employees and former employees of TotalEnergies SE and its French and foreign subsidiaries in which the Company holds directly or indirectly more than 50% (in terms of capital or voting rights), that are members of the PEG-A Group savings plan, in France and abroad, under the conditions set by the twenty-second resolution at the Shareholders’ Meeting of May 25, 2022.
CANADIAN INTEGRATEDS
Suncor Energy will cut 1,500 jobs by the end of this year, aiming to reduce costs and improve its financial performance, Globe and Mail reported on Thursday, citing details from Canadian Press.
U.S. E&PS
EQT will take Dechra Pharmaceuticals private in a deal with an enterprise value of 4.88 billion pounds ($6.16 billion), the British veterinary drugmaker said on Friday.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
KBR announced that it has entered into separate, privately negotiated agreements to repurchase $100 million principal amount of its outstanding $350 million, 2.50% Convertible Senior Notes due 2023 from certain holders of the Notes. In connection with the Note repurchases, KBR also entered into partial unwind agreements with Bank of America, N.A., BNP Paribas and Citibank, N.A. to terminate the corresponding portions of the convertible note hedge and warrant transactions KBR previously entered into with the Counterparties in connection with the issuance of the Notes. The transactions will result in a net outflow of roughly $188 million, subject to share price volatility as discussed below, and will contain the cost of this proportion of the ultimate Notes maturity in November 2023. Following the closing of the repurchases, $250 million in aggregate principal amount of Notes will remain outstanding, with terms unchanged.
Shawcor announced that it has sold its Shaw Pipeline Services (“SPS”) operating unit to a US-based investor group which includes Achieve Capital LLC and members of current SPS management. This transaction resulted from the Company’s previously announced strategic review process.
USA Compression Partners announced that its senior management will attend the RBC Capital Markets Global Energy, Power and Infrastructure Conference in New York, New York. Senior management expects to participate in a series of meetings with members of the investment community on June 6, and presentation materials used during these meetings will be posted to USA Compression’s website prior to the investor meetings.
DRILLERS
No significant news.
REFINERS
No significant news.
MLPS & PIPELINES
New Fortress Energy announced that it has received an export permit for its Altamira Fast LNG facility from Mexico’s Ministry of Energy (Secretaría de Energía (SENER)).
MARKET COMMENTARY
Wall Street futures rose as investors took comfort from the passing of the U.S. debt ceiling bill, with focus now shifting to payrolls data due later in the day that will determine whether the Federal Reserve sticks with its interest rate-hiking regime. In global markets, European shares were up with real estate and mining stocks in the lead, while Japan's Nikkei closed at a three-decade high. The dollar headed for its largest weekly fall since mid-January, while gold prices edged up. Oil prices gained with attention turning to a meeting of OPEC ministers and their allies at the weekend.
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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