Oil Trading Lower Amid Weak Economic Data from China
SECTOR COMMENTARY:
The energy sector is set for a lower start, pressured by further weakness in the underlying commodities and in the major equity futures fell as the search for a debt ceiling resolution continues and will advance to the House of Representatives for debate today.
WTI and Brent crude oil are trading sharply lower on weak economic data from China and a stronger dollar. China’s manufacturing data contracted more-than-expected and stayed below the 50-point mark that separates expansion from contraction as demand weakened. Additionally, the U.S dollar rose to its highest in over two months which saw support from cooling European inflation and progress on the U.S. debt ceiling negotiations. The market will be keeping an eye on Friday’s U.S. may non-farm payrolls data which may increase the possibility of further rate hikes if it comes in stronger-than-expected.
Natural gas futures are extending their losses on record output and forecasts for milder weather than previously expected.
BY SECTOR:
US INTEGRATEDS
JP Morgan upgraded Chevron to Neutral from Underweight.
INTERNATIONAL INTEGRATEDS
Norwegian police said they were responding to reports of a gas leak at Melkoeya, the location of Equinor’s Hammerfest LNG plant.
TotalEnergies said it would work on developing with Tree Energy Solutions a large-scale production unit in the United States for E-natural gas, a synthetic gas produced from renewable hydrogen and CO2.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
Seaport Research Partners downgraded PDC Energy to Neutral from Buy.
RANGE RESOURCES announced that its Board of Directors declared a quarterly cash dividend on its common stock for the second quarter. A dividend of $0.08 per common share is payable on June 30, 2023 to stockholders of record at the close of business on June 16, 2023.
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
New research from NuScale Power demonstrated the advanced capabilities of NuScale small modular reactors (SMRs) for reducing emissions in industrial sectors, which is critical to meeting global climate goals. Led by Co-Founder and Chief Technology Officer Dr. José Reyes, the benchmarked research found that NuScale SMRs have the potential for use in a wide variety of high-temperature industrial processes not previously envisioned using light water reactor (LWR) technology, such as heavy to light oil conversion, bulk plastic waste recycling, dissolving heavy oil to produce gasoline additives, and light plastics for the regeneration of products like synthesis gas. This capability will provide oil refiners and chemical companies with new options to decarbonize their operations and products using carbon-free nuclear energy.
DRILLERS
No significant news.
REFINERS
Vertex Energy announced the successful completion of the startup procedures for its renewable diesel conversion project at its Mobile, Alabama, refining facility. Additionally, the Company announced that it has entered into a new working capital facility with existing liquidity provider, Macquarie Group’s Commodities and Global Markets business (“Macquarie”), to supply the necessary liquidity for securing feedstock for renewable diesel production.
MLPS & PIPELINES
Enterprise Products Partners announced the completion of an expansion of its Acadian Haynesville Extension natural gas pipeline, the first of $3.8 billion of organic growth capital projects that are scheduled to be completed and begin service in 2023. This expansion adds approximately 400 million cubic feet per day of Haynesville natural gas takeaway capacity to meet growing industrial demand in the Mississippi River Corridor and supports the Louisiana liquefied natural gas (“LNG”) export market.
Frontline plc reported unaudited results for the three months ended March 31, 2023. Highest first quarter profit since 2008 of $199.6 million, or $0.90 per basic and diluted share for the first quarter of 2023. Adjusted profit of $193.3 million, or $0.87 per basic and diluted share for the first quarter of 2023. Reported revenues of $497.3 million for the first quarter of 2023.
MARKET COMMENTARY
Wall Street futures fell ahead of a crucial vote on the U.S. debt ceiling. European stocks hit an over two-month low as weak economic data from China fueled concerns about a global slowdown, while Hong Kong shares ended lower, just shy of entering a bear market territory. Japan's Nikkei snapped four-day winning streak on profit-booking and firmer yen. Gold prices slipped on expectations that the Federal Reserve will likely raise interest rates further, bolstering the dollar. Oil prices dropped.
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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