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Oil Prices Ease on Prospect of Weaker Growth, Higher Interest Rates, COVID Lockdowns

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The energy sector is poised for a lower start, pressured by weakness in the crude complex and major market indices. U.S. stock index futures edged lower as bond yields rose and growth stocks came under pressure after Federal Reserve Chair Jerome Powell’s speech cemented the central bank’s hawkish pivot.

Earnings season carried on as oilfield services firm Schlumberger reported a higher first-quarter profit and increased its dividend by 40%, as rising oil prices boosted demand for services and equipment. The company’s total revenue rose 14% to $5.96 billion in the quarter, with international revenue up around 10% led by Latin America, due to higher drilling in Mexico, Ecuador, Argentina, and Brazil. In its Europe, CIS and Africa division, revenue fell 12% sequentially due to a seasonal decline in activity and depreciation of the Russian rouble. The company posted adjusted net income of $488 million, or 34 cents per share, in the three months ended March 31, compared with $299 million, or 21 cents per share, a year earlier.

After three-straight days of gains, WTI and Brent crude oil futures eased this morning on the prospect of weaker global growth, higher interest rates and COVID-19 lockdowns in China hurting demand even as the European Union considers a ban on Russian oil that would further tighten supply. The Russia-Kazakh Caspian Pipeline Consortium will resume full exports from April 22 after almost 30 days of disruptions following repairs on one of its key loading facilities, single port mooring 3. The CPC pipeline carries around 1.2 million barrels per day of Kazakhstan’s main crude grade, light sour CPC Blend. The volume accounts for 1.2% of global demand.

Natural gas futures are trading lower as NOAA’s 6-10 day forecast shows near- to above-normal temps across much of the southwestern and Southeasterm US, and central High Plains. Below-normal temps are seen for the Northwest, much of the Great Plains, Great Lakes and Northeast.

BY SECTOR:

US INTEGRATEDS

No significant news.

INTERNATIONAL INTEGRATEDS

South Korea’s state run Korea Gas said it had signed an 18-year liquefied natural gas (LNG) supply agreement with BP PLC that starts in 2025.

Plenitude (Eni) announced that it is to invest in EnerOcean S.L., the Spanish developer of the W2Power technology for floating wind power. The deal is structured as a long-term partnership focused on the deployment of the W2Power technology as a lead contender for floating wind power developments worldwide.

The U.S. Department of Energy said it has awarded contracts for 30 million barrels of crude oil in the initial round of the largest sale ever from the Strategic Petroleum Reserve (SPR) in response to price hikes caused by Russia’s invasion of Ukraine. The contracts were awarded to 12 companies. They included 6.85 million barrels to Valero Marketing and Supply Company, 4.05 million barrels to Motiva Enterprises, 3.6 million barrels to Exxon Mobil, 2.75 million barrels to Shell, 2.6 million barrels to Glencore Ltd, 2.4 million barrels to Marathon Petroleum and 2.5 million barrels to Phillips 66.

Shell is in talks with some Chinese companies to sell its stake in a major Russian gas project amid sanctions imposed on Moscow over its invasion of Ukraine, The Telegraph reported on Thursday.

According to Reuters, a French investor group withdrew climate resolution on TotalEnergies ahead of AGM.

CANADIAN INTEGRATEDS

No significant news.

U.S. E&PS

Santos Ltd played down an Alaska road access dispute with ConocoPhillips, saying their feud was not slowing work on the $3 billion Pikka oil project or the Australian gas producer’s efforts to sell its stake in it.

CANADIAN E&PS

No significant news.

OILFIELD SERVICES

Schlumberger reported financial results for the first-quarter 2022. Revenue of $6.0 billion increased 14% year-on-year. GAAP EPS of $0.36 increased 71% year-on-year. EPS, excluding charges and credits, of $0.34 increased 62% year-on-year. On April 21, 2022, Schlumberger’s Board of Directors approved a 40% increase in the quarterly cash dividend from $0.125 per share of outstanding common stock to $0.175 per share, beginning with the dividend payable on July 14, 2022, to stockholders of record on June 1, 2022.

DRILLERS

No significant news.

REFINERS

No significant news.

MLPS & PIPELINES

Energy Transfer LP announced the quarterly cash distribution of $0.4609375 per Series C Preferred Unit, the quarterly cash distribution of $0.4765625 per Series D Preferred Unit, and the quarterly cash distribution of $0.4750000 per Series E Preferred Unit. These cash distributions will be paid on May 16, 2022 to Series C, Series D and Series E unitholders of record as of the close of business on May 2, 2022.

The Board of Directors of Holly Energy Partners, L.P. has declared a cash distribution of $0.35 per unit for the first quarter of 2022. The distribution will be paid on May 13, 2022 to unitholders of record on May 2, 2022.

The board of directors of Magellan Midstream Partners, L.P. has declared a quarterly cash distribution of $1.0375 per unit for the period Jan. 1 through March 31, 2022. The distribution, which equates to $4.15 per unit on an annualized basis, will be paid May 13 to unitholders of record at the close of business on May 2.

MARKET COMMENTARY

Futures for Wall Street’s major indexes fell as investors fretted about rate hikes in the United States and the euro zone. European shares were lower, while software giant SAP and luxury goods company Kering dragged tech and retail stocks respectively to the biggest declines, after glum first-quarter results. Japanese shares closed lower for the first time in four sessions. The euro edged lower after European Central Bank officials made mixed comments, while expectations of a 50 basis points (bps) rate hike from the Federal Reserve supported the Dollar. Oil slipped, burdened by the prospect of weaker global growth and COVID-19 lockdowns in China hurting demand even as the European Union considers a ban on Russian oil that would further tighten supply. Gold prices were in the red.


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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