Oil prices rise on tight supply concerns ahead of U.S. driving season

The energy sector is poised to start higher, supported by strength in underlying commodities despite a weaker morning for equities. U.S. equity futures are down slightly ahead of the Federal Reserve’s May meeting minutes, giving investors a better understanding of future rate hikes given the economic circumstances the U.S. is currently facing. .

WTI and Brent crude oil futures are up in early trading on concerns over tight supply and the prospect of increased demand from the upcoming U.S. driving season set to begin this Memorial Day weekend. Traders digested news from the API which showed inventories of refined petroleum products fell by 4.2 million barrels last week. Analysts expect U.S. crude oil and gasoline inventories also fell. Oil futures are also supported as buyers shun Russian oil and the European Union nears an agreement on sanctions that would phase out Russian energy imports. On the demand side, Memorial Day weekend in the United States is expected to be the busiest in two years as Americans are eager to get rid of coronavirus restrictions, despite high fuel prices.

Natural gas futures rose slightly this morning as gas volumes moving LNG to export plants hit their seven-week high, offsetting forecasts of warmer weather in major consuming regions. In international news, LNG buyers in Asia and Europe are looking to secure their supplies via long-term contracts as a buffer against global price volatility in hopes of reversing the decade-long trend of increase in cash purchases.

BY SECTOR:

INTEGRATED IN THE UNITED STATES

Exxon Mobil’s The 520,000 barrel per day (bpd) refinery in Baton Rouge, Louisiana resumed normal operations on Tuesday, company spokeswoman Julie King said.

INTERNATIONAL INTEGRATED

Petrofac continues to expand its presence in Africa, with the award of a new contract to provide offshore operations services for bp The Great Ahmeyim Turtle (GTA) Project.

On February 27, 2022, Equine decided to start the process of exiting the company’s joint ventures in Russia. Since then, Equinor has halted all new investments in Russia, ceased trading in oil and gas products from Russia and announced a $1.08 billion write-down on the balance sheet as of March 31, 2022. Equinor has now transferred its holdings in four Russian joint ventures to Rosneft and is released from all future commitments and obligations. An exit agreement from the Kharyaga project was also signed.

EniCNH Industrial and Iveco Group have signed a memorandum of understanding for possible joint social development initiatives in countries of common interest in the fields of agriculture, sustainable mobility and education, contributing to their industries respective.

Equine and Halten East partners Vår Energi, Spirit Energy and Petoro have decided to invest approximately NOK 9 billion in the development of the area adjacent to the Åsgard field in the Norwegian Sea. The area includes six gas and condensate discoveries and an option on three other prospects. The partnership submits the development and operating plan to the Ministry of Petroleum and Energy.

Equine made a new oil discovery at Snøfonn Nord, exploration well 7220/8-2 S, near the Johan Castberg field in the Barents Sea. The well was drilled five kilometers south-southeast of discovery well 7220/8-1, which is in the Johan Castberg field, and 210 kilometers northwest of Hammerfest. Equinor is the operator of Production License (PL) 532. Preliminary calculations of the size of the discovery indicate between 37 and 50 million barrels of recoverable oil. Together with fellow licensees Vår Energi and Petoro, Equinor will consider tying the discovery to the Johan Castberg field.

Johnson Matthey and bp announced that their groundbreaking co-developed Fischer Tropsch (FT) CANS technology and HyCOgen, Johnson Matthey’s innovative water and gas reverse conversion technology, have been selected for use by Aramco and Repsol in a new synthetic fuels plant in Bilbao, Spain.

Prosafe was awarded a contract for Petrobras for the supply of the Safe Eurus semi-submersible vessel for safety and maintenance off Brazil. Similar to the recently announced Safe Notos contract award, the award has a firm commitment of four (4) years and the start is end of March 2023 following the expiration of his current contract which began in October 2019. The total contract value is approximately $126 million.

Shell Overseas Investments BV and BV Dordtsche Petroleum Maatschappij, subsidiaries of Shell, have completed the sale of Shell Neft LLC, Shell’s service station and lubricants business in Russia, to PJSC LUKOIL. This follows receipt of all necessary regulatory approvals.

Shell said scheduled maintenance on its Mars platform in the Gulf of Mexico was completed on Sunday.

TotalEnergies announced the signing of agreements with Global Infrastructure Partners to acquire 50% of Clearway Energy Group, the 5th American player in renewable energies. This is its largest acquisition in renewable energy in the United States, one of the top 3 renewable markets in the world. With this transaction, TotalEnergies further accelerates its growth in the renewable energy sector by partnering with GIP, a leading global infrastructure fund.

TotalEnergies Chairman and CEO Patrick Pouyanne said the company is working on other deals similar to its previous Clearway Energy deal.

Environmental activists from Greenpeace France and other organizations launched a demonstration on Wednesday in front of TotalEnergies’ annual general meeting (AGM) of the company, to demonstrate against the environmental policies of the company.

According to Reuters, TotalEnergies CEO Patrick Pouyanne said: “the majority of our shareholders understand our position vis-à-vis Russia”. Pouyanne reaffirmed at the TotalEnergies Annual General Meeting that TotalEnergies could leave Russia, if necessary due to the sanctions situation.

The Combined General Meeting of TotalEnergies was held on May 25, 2022, under the chairmanship of Mr. Patrick Pouyanné. The shareholders adopted all the resolutions approved by the Board of Directors, in particular: Approval of the 2021 financial statements and payment of the dividend of €2.64 per share; Renewal of the three-year terms as director of Ms. Lise Croteau, Ms. Maria Van der Hoeven and Mr. Jean Lemierre; Appointment for a three-year term of Mrs. Emma de Jonge as director representing employee shareholders. In addition, the General Meeting of Shareholders issued a favorable advisory opinion on the Sustainability & Climate – Progress Report 2022, reporting on the progress made in the implementation of the Company’s ambition in terms of sustainable development and transition. energy towards carbon neutrality and related objectives by 2030 and complementing this ambition. Shareholders voted in favor of the advisory resolution proposed by the Board of Directors by a large majority, with 89% of the votes cast, thus reinforcing the 2021 vote but also the strategy proposed by the Board of Directors.

CANADIAN INTEGRATED

Cenovus Energy announced that it will repay on June 28, 2022 the entire outstanding principal amount of its 3.55% Notes due March 12, 2025.

E&PS United States

Barclays upgraded Diamondback Energy overweight of equal weight.

Barclays demoted Devon Energy equal weight of overweight.

Talos Energy said he was interested in new production, especially as major oil companies were dumping assets in a bid to decarbonize.

CANADIAN E&PS

No significant news.

OIL SERVICES

NOV announced that its board of directors has declared the regular quarterly cash dividend of $0.05 per common share, payable on June 24, 2022 to each shareholder of record on June 10, 2022.

Smart Sand, Inc. CFO Lee Beckelman discloses sale of 50,000 shares. Beckelman beneficially owns 382,000 common shares as a result of the transaction.

American Well Services, Inc. announced that it has finalized a contract with one of the largest E&P producers in the United States to provide electric pressure pumping services. Under the terms of the agreement, USWS will dedicate a new Nyx Clean Fleet to support the customer’s development program in Texas for an initial term of 18 months beginning early in the third quarter of 2022.

DRILLERS

seadrill provided financial results for the quarter ended March 31, 2022. Operating revenue was $293 million and adjusted EBITDA was $78 million, representing an EBITDA margin of 26.6%.

REFINERS

No significant news.

MLPS & PIPELINES

Energy Cheniere announced that its subsidiary, Cheniere Marketing, LLC, has entered into an agreement for the sale and purchase of liquefied natural gas with POSCO International Corporation, a subsidiary of POSCO Holdings, South Korea’s largest steelmaker and owner of the first LNG terminal private from South Korea.

International shipping lanes announced the closing of a new senior secured credit facility with an aggregate capacity of $750 million, consisting of a $530 million term loan and a $220 million revolving credit facility $70 million of which was drawn on May 24, 2022. The facility matures in May 2027.

JPMorgan updated Magellan Midstream Partners LP to Overweight from Neutral.

MARKET COMMENTARY

US stock index futures were broadly subdued ahead of the release of the Federal Reserve’s May meeting minutes. European stocks rebounded, supported by resource stocks and banks. The Japanese Nikkei closed lower, following overnight declines on Wall Street. The dollar gained as Treasury yields halted recent falls. Gold prices have fallen. Oil prices rose, helped by tighter supply and rising demand in the United States.


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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Felix J. Dixon