Oil prices fall after API report shows higher-than-expected US crude supply


The energy sector is poised to start lower, under pressure from weakness in the crude complex, while US equities trade near the fixed line as investors continue to access profits from the Q2 against the potential threat of a recession. As the earnings season continues to heat up, Baker Hughes reported a bigger-than-expected second-quarter loss, hit by a $365 million charge from its Russian operations and supply chain inflation .

WTI and Brent crude oil futures are down this morning as investors remain worried about the extent to which global central banks are determined to limit inflation and ahead of expected increases in US crude inventories. API figures released yesterday showed crude inventories rising higher than analysts had expected. The European Union would ask countries to reduce gas demand by 10 to 15% while Russia fears to reduce its supplies. Putin said Gazprom planned to meet its obligations and said the Nord Stream 1 capacity reductions were due to repairs. However, European officials remain skeptical and have accused Russia of playing politics with its gas supply.

Natural gas futures are heading higher on forecasts of warmer-than-expected weather and a preliminary drop in production.

BY SECTOR:

INTEGRATED IN THE UNITED STATES

HSBC downgraded Chevron Corporation to buy pending.

INTERNATIONAL INTEGRATED

Petrobras will cut gasoline prices at its refineries by about 5% on Wednesday, the state-owned oil company said in a statement, its first price cut since late 2021, forcing analysts to revise the country’s inflation projections.

Petrobras informed that it is paying the 2nd installment of the shareholders’ compensation approved by its Board of Directors at the meeting of 05/05/2022. The gross amount distributed today corresponds to dividends of R$1.857745 per outstanding ordinary and preferred share, based on shareholding as of May 23, 2022.

SA shell told workers at its floating liquefied natural gas (FLNG) facility Prelude it would stop paying them from Monday after extending industrial action for another two weeks over a long-running pay dispute.

TotalEnergies, as operator, announced the decision of the Papua LNG joint venture to launch the first phase of the initial engineering and design studies (FEED) of the upstream production facilities of the Papua LNG project. In parallel, the studies of the downstream liquefaction facilities are progressing in line with the overall project schedule, and the objective is to launch the integrated FEED in the fourth quarter of 2022. The project aims for a final investment decision (DIF) towards the end of 2023 , and a start at the end of 2027.

TotalEnergies said he had withdrawn permanently from Myanmar, where many international companies raised objections against the Myanmar government after the military seized power in 2021.

CANADIAN INTEGRATED

No significant news.

E&PS United States

ConocoPhillips’ The chief executive warned of looming crude oil shortages and price volatility, citing limited spare capacity within the Organization of the Petroleum Exporting Countries and slow U.S. production gains ahead.

According SECOND deposit, Murphy’s Oil will issue a redemption notice in respect of all of its outstanding 6.875% Senior Notes due 2024. The Company will redeem the Notes at the applicable redemption price set forth in the indenture governing the Notes, plus accrued and unpaid interest , where applicable, to , excluding the redemption date. The redemption date of the Notes will be August 19, 2022.

MKM Partners assumed the cover on PAA, California Resources, Civitas Resources Inc, Conoco Phillips, Denbury, Diamondback Energy, EOG Resources, Magnolia oil and gas, Murphy’s Oil, PDC Energy, Pioneer of natural resources, SM Energy, Talos Energy and Viper Energy Partners LP with a buy rating.

MKM Partners assumed the cover on CNX Resources, Comstock Resources,Coterra Energy, western oil and Range Resources with a neutral note.

CANADIAN E&PS

No significant news.

OIL SERVICES

hugue baker announced its results for the second quarter of 2022. Orders for the quarter were $5,860 million, down 14% sequentially and up 15% year-on-year. The sequential decline is the result of lower order intake in Turbomachinery & Process Solutions and Oilfield Equipment, partially offset by an increase in Oilfield Services and Digital Solutions. Sequentially, equipment orders were down 37% and services orders were up 14%. Revenue for the quarter was $5,047 million, an increase of 4%, sequentially. The revenue increase was driven by higher volume in Digital Solutions, Oilfield Services and Oilfield Equipment, partially offset by lower volume in Turbomachinery & Process Solutions. GAAP loss per share was ($0.84) for the quarter, which included $0.95 per share of adjusting items. Adjusted earnings per share (a non-GAAP measure) was $0.11.

JPMorgan demoted Eagle materials to neutral overweight.

Matson announced preliminary second quarter financial results, provides an activity update and announces that its second quarter earnings call will take place on August 1, 2022. Chairman and CEO Matt Cox said “In our domestic ocean trade lanes, we saw continued strength in Alaska with higher volume year-over-year and lower volumes in Hawaii and Guam compared to the same time of year former. In Logistics, operating income increased year-over-year with strength across all business lines as we continue to see favorable supply and demand fundamentals in our core markets. As a result, Matson forecasts shipping operating profit of $465.0-470.0 million and logistics operating profit of $22.5-23.5 million for the second quarter of 2022. We also expect Q2 2022 net income and diluted EPS of $373.3 to $377.9 million and $9.31 to $9.42, respectively.

DRILLERS

No significant news.

REFINERS

No significant news.

MLPS & PIPELINES

Energy Cheniere announced that its wholly-owned subsidiary, Cheniere Marketing, LLC, has entered into a long-term liquefied natural gas sales and purchase agreement with a subsidiary of PetroChina Company Limited. Under the SPA, PetroChina’s subsidiary, PetroChina International Company Limited, has agreed to purchase up to approximately 1.8 million tonnes per year of LNG from Cheniere Marketing on a free on board basis. Deliveries under the SPA will start in 2026, reach 1.8 mtpy in 2028 and continue until 2050. The purchase price of LNG under the SPA is pegged to the Henry Hub price, plus a fixed liquefaction. Half of the total volume, or approximately 0.9 mtpa, is subject to Cheniere taking a positive final investment decision to build additional liquefaction capacity at the Corpus Christi LNG terminal beyond the Corpus Christi Stage project 3 to seven trains.

DCP Midstream, LP announced that the board of directors of its general partner has declared a cash distribution on Common Units for the second quarter of 2022 of $0.43 per unit, or $1.72 per unit on an annualized basis. This quarterly distribution on Ordinary Units represents a 10% increase over the previous quarter’s distribution and will be paid on August 12, 2022 to Ordinary Unitholders of record at the close of business on July 29, 2022.

Kinder Morgan El Paso Natural Gas Company, LLC declared force majeure due to equipment failure at its Bluewater Compressor Station.

MARKET COMMENTARY

US equity futures fell slightly and European indices were in the red as news of a deepening crisis in Ukraine drove investors away from riskier assets. The Japanese Nikkei closed higher as tech stocks trailed overnight gains on Wall Street. Gold prices strengthened as the dollar depreciated. Oil prices fell ahead of key data expected to show rising U.S. crude inventories. Tesla and United Airlines are expected to report second-quarter results after the market closes.


The Nasdaq Advisory Services Energy Team is part of the Nasdaq Advisory Services, the most experienced team in the industry. The team provides unparalleled shareholder analysis, a comprehensive view of trading and investor activity, and insights on how best to manage investor relations outreach efforts. If you have any questions, please contact Tamar Essner.


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