Oil Prices Rise after Major Storm Disrupts CPC Pipeline

 

The energy sector is set for a higher start supported by strength in the underlying commodities while US markets are expected to open lower on weakness in the major equity futures.

The energy sector is set for a higher start supported by strength in the underlying commodities while US markets are expected to open lower on weakness in the major equity futures. U.S. stock index futures edged lower giving back some of the gains from yesterday’s mega cap fueled rally on Wall Street, as investors assessed the outlook for U.S. interest rates following calls from Federal Reserve policymakers suggesting a more hawkish Fed.

WTI and Brent crude oil futures are higher in early trading supported by disruption of Russian and Kazakh crude exports via the Caspian Pipeline Consortium terminal. Crude oil exports from Kazakhstan's CPC pipeline on Russia's Black Sea coast stopped fully on Wednesday after damage caused by a major storm. Russian Deputy Prime Minister Alexander Novak said that oil supplies by the CPC, which ships around 1.2 million barrels per day, may be completely stopped for up to two months due to damaged berths at a Black Sea terminal. As for the ongoing geopolitical tensions in Eastern Europe, U.S. President Joe Biden is set to announce more Russian sanctions when he meets with European leaders on Thursday in Brussels, including an emergency meeting of NATO.

Natural gas futures rose on cooler weather forecasts and higher heating demand than previously expected. In other natural gas related news, Russian President Vladimir Putin said Russia would start selling natural gas to "unfriendly countries" in roubles, after a freeze on Russia's assets by foreign nations had destroyed Moscow's trust.

BY SECTOR:

US INTEGRATEDS

Romanian natural gas producer Romgaz said its board of directors approved the acquisition of Exxon Mobil's 50% stake in the Black Sea offshore project Neptun Deep, which is expected to be completed in the second quarter of the year.

Exxon Mobil is drilling in a new area offshore of Brazil that could have as much as 1 billion barrels of oil and gas, its partner Murphy Oil said.

Exxon Mobil appointed Dan Ammann, former president of automaker General Motors, to lead the oil company's energy transition business effective May 1. Ammann replaces Joe Blommaert as chief of its Low Carbon Solutions unit, Exxon said. Blommaert will retire after 35 years at the oil producer.

The board of directors of Exxon Mobil said that lead independent director Kenneth C. Frazier has announced his intention not to stand for re-election to the board at the annual meeting of shareholders on May 25. Joseph (Jay) L. Hooley, former chairman and CEO of State Street Corp. and ExxonMobil director since 2020, has been selected by the independent directors to serve as lead director, effective after the annual meeting.

INTERNATIONAL INTEGRATEDS                                           

The 2022 Formula 1 season launches a dynamic new collaboration in motor-sports as Aramco becomes a strategic partner of Aston Martin Racing (AMR).

Reuters reported that BP is seeking buyers for its shut-down Foinaven oilfield in the North Sea, hoping Britain's renewed focus on domestic production will attract buyers interested in extracting the field's remaining reserves, industry sources said.

Marubeni signed a Cooperation Agreement and a Participation Agreement with BP Alternative Energy Investments Limited, a 100% subsidiary of BP, to work together to achieve the development of offshore wind opportunities as well as potentially explore other decarbonization projects including hydrogen. As a first step, Marubeni and BPAEIL have agreed to set up a joint venture in which BPAEIL participates in a 49% stake for selected potential offshore wind business opportunity in Japan.

Financial Times reported that BP will this week unveil an additional £1bn for new electric car charging points in the UK, one of a number of investments the government hopes to announce alongside its long-awaited infrastructure strategy.

Morgan Stanley upgraded BP to Overweight from Equal-Weight.

Reuters reported that Cornerstone investors Eni and CDP together with a pool of banks are ready to advance 1.5 billion euros of an overall 2 billion euro capital increase to rescue troubled Italian energy service group Saipem.

Morgan Stanley downgraded Eni to Equal-Weight from Overweight.

Petrobras, following up on the release disclosed on December 20, 2019, informed that was concluded the process of closing Participações em Complexos Bioenergéticos S.A. (PCBios), a company in which Petrobras held a 50% interest and Mitsui & Co. Ltd. held the other 50%. The dissolution and liquidation of PCBios were approved in the company's General Assembly.

Brazilian oil company 3R Petroleum Oleo e Gas SA denied having submitted a bid for Petrobras' Bahia Terra cluster, saying it has decided not to take part in the binding stage of the process.

Petrobras, regarding the pieces of news in the media regarding the sale of the onshore production fields, located in the Recôncavo and Tucano Basin, in the state of Bahia, jointly called Bahia Terra Cluster, clarified that it received new binding offers in the scope of this divestment process.

Following the announcement on November 30 2021, with respect to the signature of the contracts for FPSO Alexandre de Gusmão, SBM Offshore announced that it has entered into a shareholder agreement with its long standing business partners Mitsubishi Corporation (MC) and Nippon Yusen Kabushiki Kaisha (NYK). MC and NYK have acquired a respective 25% and 20% ownership interest in the special purpose companies related to the lease and operation of the FPSO Alexandre de Gusmão. SBM Offshore is operator and will remain the majority shareholder with 55% ownership interest. FPSO Alexandre de Gusmão is currently under construction. The FPSO will be deployed at the Mero field in the Santos Basin offshore Brazil, 160 kilometers offshore Rio de Janeiro, under a 22.5-year lease and operate contract with Petróleo Brasileiro S.A. (Petrobras). The Mero Unitized field is operated by Petrobras (38,6%) in partnership with Shell Brasil (19,3%), TotalEnergies (19,3%), CNPC (9,65%), CNOOC Limited (9,65%), and Pré-sal Petróleo S.A. – PPSA (3,5%) as the Federal Union representative in non-contracted areas.

A Dutch court rejected a suit against Shell brought by four widows of activists who were executed by the Nigerian government in 1995 after they protested against the oil's company's exploitation of the Niger Delta.

Shell and the German LNG Terminal joint venture have signed a memorandum of understanding on the import of LNG through the planned terminal in Brunsbüttel.

Sabah Shell Petroleum Company Limited, Shell Sabah Selatan Sdn Bhd and Sarawak Shell Bhd signed three Production Sharing Contracts with PETRONAS, to explore oil and gas offshore Sabah and Sarawak. SSPC and SSB will operate these exploration initiatives. These three PSCs will comprise exploration of blocks SK439/SK440 in shallow water, off the coast of Sarawak and exploration of blocks SB-2W and SB-X in deep water, off the coast of Sabah.

TotalEnergies' decision to quit Russian oil supply contracts does not put the overall future of the French energy company at risk, the company's chairman and chief executive Patrick Pouyanne told RTL radio.

Stellantis, TotalEnergies / Saft and Mercedes-Benz have finalized the agreement to welcome Mercedes-Benz as a new, equal partner of Automotive Cells Company (ACC). The partners have committed to increase ACC's industrial capacity to at least 120 GWh by 2030. By then, its French (Billy-Berclau/Douvrin) and German (Kaiserslautern) plants will each be able to produce at least 40 GWh per year against the 24 GWh initially planned. In addition, ACC's industrial footprint would be enriched by a third production site in Termoli, Italy.

Deutsche Bank downgraded TotalEnergies SE to Hold from Buy.

CANADIAN INTEGRATEDS

No significant news.                     

U.S. E&PS

Devon Energy was downgraded by StockNews.com from a “buy” rating to a “hold” rating in a report issued on Wednesday.

Hess said it would consider adding this year a fourth drilling rig to its North Dakota' production operations in the Bakken shale if prices stay strong.

Hess at the Scotia Howard Weil Energy Conference said it got rid of the portion of its oil hedge that limits its exposure to sky high oil prices less than six months after doubling the volumes protected under the program. The company paid about $325M to remove its $100/bbl WTI and $105/bbl Brent hedges.

CANADIAN E&PS

No significant news.

OILFIELD SERVICES

Halliburton announced Energean, an independent E&P company focused on developing resources in the Mediterranean and the North Sea, awarded it a study to assess carbon storage potential of the Prinos basin in Greece.

RPC Inc holder Rollins Holding Company discloses sale of 685K shares.

DRILLERS

No significant news.

REFINERS

No significant news.

MLPS & PIPELINES

DCP Midstream, LP announced the amendment and renewal of its $1.4 billion revolving credit facility, which now includes sustainability-linked pricing metrics. The $1.4 billion unsecured revolving credit facility has been extended five years and will mature in March 2027. Additionally, in anticipation of the cessation of the London Interbank Offered Rate, this is one of the energy industry’s first credit facilities linked to the Secured Overnight Financing Rate.

MARKET COMMENTARY

U.S. stock index futures were down, mirroring European shares, as lingering worries over the economic fallout of the Ukraine crisis hurt investor sentiment. Asian equities ended higher, supported by technology stocks, with Japan’s Nikkei closing at their highest level in more than two months. The dollar edged up, as investors waited for U.S. President Biden to unveil new sanctions against Russia during his trip to Europe. Oil prices rose in volatile trading on increasing concerns of global supply tightness. Gold prices were in the positive territory.  New home sales data for February is on the economic radar.


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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