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Oil Prices Decline as Traders Weigh Large U.S. Oil Stock Against Tight Global Supply

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The energy sector is poised for a lower start pressured by weakness in the crude complex. U.S. stock futures are hugging the flatline ahead of first-quarter earnings from a slew of Wall Street lenders on the last day of a holiday-shortened week. Quarterly results from big U.S. banks are expected to show a sharp decline in investment banking revenue and first-quarter earnings overall due to companies pausing deals amid choppy equity markets.

WTI and Brent crude futures are down this morning as traders digested news of a larger-than-expected build in U.S. oil stocks against tightening global supply. The release of the EIA report showed U.S. crude stocks surged by more than 9 million barrels, far surpassing analysts’ expectations in part due to releases from the nation’s strategic reserves, while gasoline and distillate inventories fell last week. In order to combat high energy prices, U.S. oil production forecasts are being revised upwards despite labor and supply chain constraints as higher prices spur more drilling and well completion activity. As Western nations continue to impose sanctions on Moscow, major global trading houses are planning to reduce crude and fuel purchases from Russia’s state-controlled oil companies as early as May 15, sources said, to avoid falling foul of European Union sanctions.

Natural gas futures rose today on a rise in daily feedgas to LNG export plants and higher demand for U.S LNG amid the war in Ukraine. President Vladimir Putin said on Thursday that Moscow will work to re-direct its energy eastward as European countries try to reduce reliance on Russian exports, adding that Europe will not be able to completely shun Russian gas immediately.

BY SECTOR:

US INTEGRATEDS

Sealed Air, ExxonMobil, and Ahold Delhaize USA announced their collaboration on an advanced recycling initiative, the first of its kind in the U.S. The project recycles flexible plastics from the food supply chain and remakes them into new, certified circular food-grade packaging. The initiative is expected to begin this summer and scale over time.

Reuters reported that a gasoline-producing fluidic catalytic cracker (FCC) returned to full production on Tuesday after restarting late last week at Exxon Mobil’s 502,500 barrel-per-day (bpd) Baton Rouge, Louisiana, refinery.

INTERNATIONAL INTEGRATEDS

Eni announced late on Wednesday new oil and gas discoveries in Egypt’s Meleiha concessions, which would add around 8,500 daily barrels of oil equivalent to production.

Petrobras, following up on release disclosed on February 23, 2022, informed that, in a meeting, the Annual General Meeting (AGM) approved the remuneration to shareholders relative to the Fiscal Year 2021 in the amount of R$ 7.773202 per outstanding share (common or preferred). This amount includes the prepayments already made throughout 2021 and the complementary dividend to be paid starting May 16, 2022. The complementary dividend is equivalent to R$ 2.8610762 per outstanding share (common or preferred). Considering the monetary adjustment by the SELIC rate from 12/31/2021 until today, this value has an increase of R$ 0.0811879 per share. Thus, the total gross amount to be distributed to shareholders, considering the monetary adjustment until today, is equivalent to R$ 2.9422641 per share.

Shareholders in Petrobras have voted José Mauro Coelho onto its board, paving the way for the government technocrat to take the helm of the state-run oil company.

Petrobras informed that it received, at sight, the amount of R$ 5.26 billion from Shell Brasil Petróleo Ltda. – Shell, referring to its share of 25% in the compensation for Atapu, a block acquired by the consortium composed by Petrobras (52.5%), Shell (25%) and Total Energies EP Brasil Ltda. – TotalEnergies (22.5%) in the 2 nd Bidding Round for the Transfer of Rights surplus under the Production Sharing Regime, on 12/17/2021.

Goldman Sachs upgraded Repsol to Buy from Neutral.

TotalEnergies and ENEOS announced a collaboration to jointly conduct a feasibility study to assess the production of Sustainable Aviation Fuel (SAF) in ENEOS Negishi Refinery in Yokohama city, Japan. The companies have already started to conduct the study for feedstock procurement and production of SAF related to this project. The proposed unit, which capacity would be 300,000 tons per year of SAF, would process waste or residue sourced notably from the circular economy, mainly used cooking oil and animal fat. The two companies are considering establishing a new joint venture to produce SAF.

Brazil granted 59 exploratory blocks of oil and natural gas to 13 companies, including Shell, TotalEnergies and 3R Petroleum. The auction totaled 422.4 million reais ($90.10 million) in signature bonus, registering a premium of 854.84%, according to data from the country’s oil regulator ANP.

CANADIAN INTEGRATEDS

No significant news.

U.S. E&PS

Stephens initiated coverage on Earthstone Energy with an Equal-Weight rating.

EQT Corp was transferred with buy rating from buy rating, target $37.

Ranger Oil announced that the Company has reduced its leverage to its previously stated target, and its Board of Directors approved a $100 million share repurchase program. As of March 31, 2022, Ranger had a net debt balance of approximately $521.6 million, down approximately $64.9 million (11%) from its net debt balance as of December 31, 2021.

Stephens initiated coverage on Talos Energy with an Overweight rating.

Whiting Petroleum announced that its Board of Directors declared a quarterly cash dividend of $0.25 per share on Whiting’s outstanding common stock. The dividend is payable June 1, 2022, to stockholders of record at the close of business on May 20, 2022.

CANADIAN E&PS

No significant news.

OILFIELD SERVICES

Scotiabank initiated coverage on CES Energy Solutions with a Sector Outperform rating.

KBR was awarded a $62 million, five-year recompete task order to provide conception-to-completion development, testing, engineering and analysis services for the U.S. Army Program Executive Office (PEO) Missiles and Space, Tactical Aviation and Ground Munitions Project Office, and Strategic and Operational Rockets and Missiles (STORM) Project Office.

PrePetro Holdings Corp announced the extension of its existing asset-based loan facility to a five-year term and a reduction of commitments from $300M to $150M. The Amended ABL will extend the maturity from 2023 to 2027 and, through updated advance formulas and other provisions, provide enhanced availability with improved pricing. No advances under the Amended ABL are currently outstanding.

DRILLERS

No significant news.

REFINERS

Commodities trader Glencore has sold 1 million barrels of June-loading Murban crude to Marathon Petroleum in a rare deal, traders said.

MLPS & PIPELINES

The Board of Directors of Antero Midstream declared a cash dividend of $0.225 per share for the first quarter of 2022, or $0.90 per share on an annualized basis. The dividend will be payable on May 11, 2022 to stockholders of record as of April 27, 2022.  Antero Midstream did not repurchase any common shares during the first quarter of 2022. Antero Midstream had approximately $150 million of remaining share repurchase capacity under its $300 million authorized share repurchase program as of March 31, 2022.

Enbridge will face a shareholder proposal at its annual general meeting on May 4 regarding the adequacy of its net zero plans. While the company claims to have a net zero strategy, the proposal asks for this to be “science based,” with several measures that would prove it to be so.               

Kimbell Royalty Partners, LP was initiated with an Overweight rating at Stephens, target $22. Had diverse asset base with nearly every top US basin and top tier operators. Growth opportunities supported by low PDP decline and fragmented minerals landscape.         

MARKET COMMENTARY

Futures for Wall Street’s major indexes were mixed amid earnings from a slew of major U.S. banks. Investors also awaited jobless claims and retail sales numbers to gauge the health of the economy. European shares edged higher after a mixed batch of earnings. The euro rose against the dollar ahead of ECB’s rate decision. Gold prices fell as risk appetite recovered. Oil prices slipped on an anticipation of larger-than-expected U.S. stockpiles.


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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