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The energy sector is poised for a mixed to lower start, pressured by weakness in the underlying commodities but supported by strength in the major equity futures which are adding to yesterday’s late day rally on the heels of results from the big banks.
WTI and Brent crude oil futures turned lower this morning and are down ~1% in early trading, pressured by rising global recession fears and concerns of falling demand. The IEA slashed its global oil demand growth estimates for 2022 and 2023 yesterday, citing the possibility of a recession in several European countries and increasing risks for emerging economies. For 2022 the group now expects oil demand to grow by 1.9 million bpd, down from their prior 2 million bpd projection while next year, they forecast demand to drop to 1.7 million bpd from 2.1 million bpd. Meanwhile, China has been fighting COVID flare-ups after a week-long holiday. While the country’s infection tally is small by global standards, China adheres to a zero-COVID policy that is weighing heavily on economic activity and thus oil demand.
Natural gas futures are lower in early trading, retreating from yesterday’s rally amid weakness amid yesterday’s larger-than-expected storage report and moderating extended forecasts.
BY SECTOR:
US INTEGRATEDS
No significant news.
INTERNATIONAL INTEGRATEDS
Azerbaijan’s energy ministry said that oil output at the country’s BP-led Azeri–Chirag–Gunashli project was 15.4 million tonnes from January to September.
Lebanon’s caretaker energy minister said Qatar has expressed an interest in joining a consortium involving Eni and TotalEnergies that is exploring for oil in the eastern Mediterranean sea.
TotalEnergies reported Q3 European refining margin indicator of $99.2/t vs year-ago $8.8/t. Q3 main indicators include: Avg liquids price ($/b) of 93.6 vs year-ago 67.1; Avg gas price ($/Mbtu) of 16.83 vs year-ago 6.33; Avg LNG price ($/Mbtu) of 21.51 vs year-ago 9.10; Brent ($/b) of 100.8 vs year-ago 73.5.
Equinor announced that six contracts have been awarded to five shipowners, for a total value estimated at more than NOK 2,5 billion including options. The six platform supply vessels will be managed by Simon Møkster Shipping AS, Island Offshore Management AS, Eidesvik AS, Remøy Shipping AS and P/F Skansi Offshore.
Petrobras informed that it has started the opportunity disclosure stage (teaser), regarding the sale of 100% of its stake in Petrobras Operaciones S.A. (POSA), Petrobras’ wholly owned subsidiary in Argentina, which holds a 33.6% stake in the Rio Neuquén Field.
Shell Energy Australia, Shell Plc’s renewable energy business in the country, and AMPYR Australia (AMPYR) signed an agreement to develop a battery energy storage system, the companies said.
Microvast Holdings announced its participation in a mining industry electrification consortium led by Shell.
The CGT union at the core of a weeks-long strike at TotalEnergies slammed the door to talks, leaving more moderate unions to reach a wage deal as industrial action continues to leave French petrol stations short of fuel. A few hours later, the more moderate CFDT and CFE-CGC unions representing a majority of workers struck a deal with TotalEnergies for a 7% pay rise and bonus payment from 3,000 euros to 6,000 euros ($2,921 to $5,842). TotalEnergies confirmed the agreement. Though the deal is legally binding under French law, the CGT standoff means mean strike action could continue for some time yet.
CANADIAN INTEGRATEDS
No significant news.
U.S. E&PS
As per SEC filing, Range Resources reported Q3 non-cash fair value loss on derivatives of ($457.7M). Total net cash payment on derivative settlements is expected to be ($464.7M).
CANADIAN E&PS
No significant news.
OILFIELD SERVICES
Oceaneering International, Inc. announced that its Subsea Robotics segment won multiple contracts during Q3 of 2022, with anticipated aggregate revenue of $300M. These service contracts are with international energy operators and marine construction companies, and range in duration from several months to five years. Additionally, some contracts contain option periods that, if exercised, would increase both the duration and overall value of the contracts. The contracts cover globally diverse regions and reflect significant contract wins in South America, the North Sea and West Africa.
USA Compression Partners, LP announced a cash distribution of $0.525 per common unit ($2.10 on an annualized basis) for the third quarter of 2022. The distribution will be paid on November 4, 2022 to unitholders of record as of the close of business on October 24, 2022.
Weatherford International announced entering into a strategic agreement with Kwantis, a leading advanced drilling analytics company. This agreement will strengthen the Weatherford Centro well construction optimization platform with multi-well benchmarking and Drilling KPI analytics to provide exceptional visibility and performance optimization across multiple operations for clients.
DRILLERS
Transocean issued a quarterly Fleet Status Report that provides the current status of, and contract information for, the company’s fleet of offshore drilling rigs. The aggregate incremental backlog associated with these fixtures is approximately $1.6 billion. As of October 13, the company’s total backlog is approximately $7.3 billion.
REFINERS
No significant news.
MLPS & PIPELINES
DCP Midstream, LP announced that the board of directors of its general partner declared a third quarter 2022 Common Unit cash distribution of $0.43 per unit, or $1.72 per unit on an annualized basis. This quarterly Common Unit distribution will be paid November 14, 2022 to common unitholders of record at the close of business on October 28, 2022. In addition, the board of directors declared distributions for preferred units. A semi-annual Series A Preferred Unit cash distribution of $36.875 per unit will be paid December 15, 2022 to preferred unitholders of record at the close of business on December 1, 2022. A quarterly Series B Preferred Unit cash distribution of $0.4922 per unit will be paid December 15, 2022 to preferred unitholders of record at the close of business on December 1, 2022. A quarterly Series C Preferred Unit cash distribution of $0.4969 per unit will be paid January 17, 2023 to preferred unitholders of record at the close of business on January 3, 2023.
Targa Resources announced its quarterly dividend on common shares with respect to the third quarter of 2022. Targa announced that its board of directors has declared a quarterly cash dividend of $0.35 per common share, or $1.40 per common share on an annualized basis, for the third quarter of 2022. This cash dividend will be paid November 15, 2022 on all outstanding common shares to holders of record as of the close of business on October 31, 2022.
MARKET COMMENTARY
U.S. stock index futures ticked higher after JPMorgan and Wells Fargo reported their third-quarter results and as investors awaited a slew of economic data due later in the day. European shares climbed as hopes grew of a U-turn in some fiscal steps announced by the British government. Japanese shares rebounded, supported by a strong performance from Fast Retailing and Chinese stocks clocked their biggest gains in five-and-a-half months after a dramatic rebound on Wall Street overnight and China’s central bank chief promised stronger support for the real economy. The U.S. dollar was higher, while gold prices slipped. Oil dipped as global recession fears and weak oil demand, especially in China, outweighed support from a large cut to the OPEC+ supply target. Retail sales, business inventories and University of Michigan’s preliminary take on consumer sentiment is scheduled for release later in the day.
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.
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