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Oil Prices Rise as Supply Constraints Outweigh Lower Fuel Demand

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The energy sector is set for a lower start, pressured by weakness in the major averages. U.S. stock futures are trading down as the markets expect the Federal Reserve to maintain its aggressive monetary policy stance at tomorrow’s policy meeting.

WTI and Brent crude oil futures edged up in morning trading as supply constraints continue to overpower the possibility of weaker economic growth and lower fuel demand. Oil futures are roughly flat as investors remain on alert ahead of the Federal Reserve policy meeting tomorrow where it is expected the Fed will raise interest rates by 75 basis points. Markets around the world remain concerned on the possibility of a global economic slowdown as central banks across the world hike interest rates in order to tame inflation. This morning, Sweden’s central bank hiked its benchmark rate by a greater than expected full percentage point and warned of more to come. Rate hikes are expected from the Bank of England and the Swiss Central Bank which will hold their policy meetings on Thursday. Tighter monetary policies have also lent support to the U.S. Dollar which is holding up near a 20-year high. Additionally, the DOE said it would sell up to 10M barrels from the SPR for delivery in November, which extends the plan’s original aim to sell 180M barrels by the end of October.

Natural gas futures are slightly higher as European gas prices remain at record highs and on forecasts for more demand in the next few weeks than previously expected.

BY SECTOR:

US INTEGRATEDS

Reuters reported that Chevron-led Tengizchevroil (TCO), Kazakhstan’s Tengiz oilfield operator, plans to divert 200,000 tonnes of oil to Georgia’s Batumi port in October via rail as it seeks alternative routes for its exports due to CPC terminal maintenance, two sources familiar with the company’s plans said.

Chevron is marketing its interest in more than 2,000 oil and gas wells in Alaska, the company told Reuters, in a move that could mark the oil major’s second exit from oil production in the state in three decades.

Reuters reported that Exxon Mobil is uncertain whether it will bid for new offshore areas Guyana wants to explore, a person close to the matter said, as the oil major ramps up production faster than expected and the South American country wrestles with fixing terms of new oil leases.

INTERNATIONAL INTEGRATEDS

Aramco said that capping energy bills and taxing oil companies was not a long term solution for the global energy crisis. Chief executive Amin Nasser also lamented the continuing lack of investment in the oil and gas sector.

According to Reuters, Naturgy and Equinor advance in offshore wind alliance and plan 200 MW wind farm in the Canary Islands.

Bloomberg  reported that Pilipinas Shell Petroleum Corp., the publicly listed Philippine arm of Shell, plans to have retail shops and restaurants in a third of its gasoline refilling stations by 2025 as its seeks to boost revenues beyond fuel.

TotalEnergies has approved the final investment decision for the Fenix gas development, located 60 km off the coast of Tierra del Fuego in southern Argentina. Through its Total Austral affiliate, TotalEnergies operates the project with a 37.5% interest, in partnership with WintershallDea (37.5%) and Pan American Sur (25%).

According to Reuters, TotalEnergies’ Saft division won batteries deal for Grand Paris Express transport project.

CANADIAN INTEGRATEDS

No significant news.

U.S. E&PS

KeyBanc initiated coverage on Comstock Resources, Denbury, Diamondback Energy, EOG Resources, Magnolia Oil & Gas, Matador Resources, Pioneer Natural Resources and SM Energy with an Overweight rating. It also initiated coverage on Callon Petroleum and PDC Energy with a Sector Weight rating.

Coterra Energy announced that it has issued notices of redemption with respect to its 4.375% Senior Notes due 2024 and the 4.375% Senior Notes due 2024 of Cimarex Energy Co., the Company’s subsidiary. The Company (i) gave holders of the Coterra 2024 Notes notice that, on September 29, 2022, the Company will redeem $705,495,000 aggregate principal amount of the outstanding Coterra 2024 Notes, representing all of the outstanding Coterra 2024 Notes, and (ii) gave holders of the Cimarex 2024 Notes notice that, on October 19, 2022, the Company will redeem $44,497,000 aggregate principal amount of the Cimarex 2024 Notes, representing all of the outstanding Cimarex 2024 Notes. The redemption price for each series of Notes will be equal to the greater of (i) 100% of the principal amount thereof and (ii) the “make-whole” redemption premium specified in the respective indenture governing such series of Notes, plus, in either case, accrued and unpaid interest to the respective Redemption Date for each series of Notes.

CANADIAN E&PS

No significant news.

OILFIELD SERVICES

No significant news.

DRILLERS

Tamboran has entered into a strategic alliance and has secured $22 million (US$15 million) equity investment from a subsidiary of Helmerich & Payne. The investment forms part of Tamboran’s $138 million equity placement, announced on 20 September 2022. Tamboran will utilise the proceeds from the recent equity placement to focus on the development of the Beetaloo Basin. Additionally, the strategic alliance with H&P, which has significant expertise in deep unconventional shale drilling, is expected to assist Tamboran in accelerating development drilling in the region at a reduced cost.

REFINERS

No significant news.

MLPS & PIPELINES

Flyscan Systems announced the closing of a $3.5 million USD venture capital financing with strategic investor Hatch, together with BDC Capital’s Cleantech Practice and Enbridge.  The funding will enable Flyscan to support commercialization and scaling up its operations as it has entered commercial agreements with multiple energy companies in North America. 

Summit Midstream Partners, LP announced that its wholly owned subsidiary, Summit Midstream Holdings, LLC, signed and closed on the sale of Bison Midstream, LLC, its gas gathering system in Burke and Mountrail Counties, North Dakota to Steel Reef Infrastructure Corp. (“Steel Reef” or the “Company” through its wholly owned subsidiary Steel Reef US Corp.), an integrated owner and operator of associated gas capture, gathering and processing assets in North Dakota and Saskatchewan, for cash consideration of $40 million, subject to customary transaction adjustments.

MARKET COMMENTARY

U.S. stock index futures fell a day after a relief rally on Wall Street, with expectations of another large interest rate hike by the U.S. Federal Reserve keeping risk-taking bets in check. Rate hike worries continued to weigh on European shares. In Asian equity markets, China stocks snapped a four-session losing streak, while Japan’s Nikkei marked slight gains in back-and-forth trading. The dollar remained strong around a two-decade high versus major peers, while gold prices slipped. Oil prices edged up as OPEC and its allies keep producing less than their quotas. Traders will keep any eye on housing market data due 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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