Oil Prices Fall but Recovering Demand Outlook Remains Positive

SECTOR COMMENTARY:

Energy stocks are poised for a mixed start, weighed down by weakness in the crude complex while the broader index futures are slightly higher as the S&P 500 makes another attempt at a record. In company news, Contango Oil & Gas agreed to combine with KKR’s Independent Energy Business in an all-stock deal. The combined company will have an initial market capitalization of about $4.8 billion.

Oil prices extended their losses this morning on profit taking and a stronger U.S. dollar, but overall optimism about recovering demand kept a floor under prices. "A previous price surge that was probably premature, coupled with a stronger U.S. dollar are weighing on oil prices," Commerzbank said.

Natural gas futures are up 2.9% to $3.160, above its best closing level since mid-February. NOAA 6-10 and 8-14 day forecasts yesterday afternoon both predicted temps in the East will run below-seasonal, though some overnight models have the East warming up.

US INTEGRATEDS

No significant news.

INTERNATIONAL INTEGRATEDS  

According to Reuters, Petrobras said there is still no decision regarding braskem sale.

According to Reuters, Oman LNG and Royal Dutch Shell have signed an agreement to deliver the Sultanate's first carbon-neutral liquefied natural gas (LNG) cargo.

CANADIAN INTEGRATEDS     

JPMorgan upgraded Cenovus Energy to Overweight from Neutral.

U.S. E&PS   

EOG Resources announced that Ezra Y. Yacob will become EOG's Chief Executive Officer and join the Board of Directors, and that Lloyd W. "Billy" Helms, Jr., EOG's Chief Operating Officer, will be appointed to the additional role of President. Both promotions will be effective October 1, 2021. After 42 years with the company and serving as CEO since 2013, William R. "Bill" Thomas will retire and assume the role of Non-Executive Chairman of the Board as part of the succession plan.

Citigroup initiated coverage on Talos Energy with a Buy rating.

Talos Energy announced that it formed an exclusive joint venture with Storegga Geotechnologies Limited to source, evaluate and develop carbon capture and storage project opportunities on the United States Gulf Coast and Gulf of Mexico, including state and federal waters offshore Texas, Louisiana, Mississippi and Alabama. The Partners are actively exploring opportunities with counterparties along the CCS value chain.

CANADIAN E&PS   

Crescent Point Energy completed the disposition of its remaining non-core southeast Saskatchewan conventional assets, which were previously identified as disposition candidates, for cash proceeds of $93 million. As a result of the Transaction, Crescent Point also reduced asset retirement obligations by approximately $220 million, or nearly 25 percent of its ARO balance as at March 31, 2021. Proceeds from the disposition have been directed to the Company's balance sheet.

OILFIELD SERVICES    

Baker Hughes and C3 AI announced that KBC, a wholly-owned subsidiary of Yokogawa Electric Corporation, will deploy artificial intelligence (AI) technology from the BakerHughesC3.ai (BHC3) alliance to enhance KBC’s existing software portfolio for oil and gas process simulation, supply chain optimization, and energy management.

DRILLERS     

Nabors Industries announced that Nabors Energy Transition Corp., a newly formed special purpose acquisition company and an affiliate of Nabors, filed a Registration Statement on Form S-1 with the Securities and Exchange Commission in connection with a proposed initial public offering of its units. NETC intends to list its units on the New York Stock Exchange under the symbol "NETC.U". Each unit will consist of one share of NETC's Class A common stock and one-third of one redeemable warrant to purchase one share of NETC's Class A common stock.

REFINERS   

Multiple units were shut at Valero Energy’s 89,000 barrel-per-day (bpd) Three Rivers, Texas, refinery by Tuesday morning, Reuters reported.

MLPS & PIPELINES   

According to Reuters, environmental protesters clashed with police on Monday while occupying a pump station on Enbridge’s Line 3 pipeline in Minnesota, while Enbridge said it evacuated 44 workers from its site.

Enbridge announced that a subsidiary of Enbridge entered into a definitive agreement to sell its 38.9% non-operating minority ownership interest in Noverco Inc. (Noverco) to Trencap L.P. for $1.14 billion in cash, net of Noverco non-recourse debt assumed by Trencap L.P. This represents a valuation of approximately 29x reported 2020 GAAP earnings of $39 million.

The Haisla Nation and Pembina Pipeline are pleased to announce a partnership agreement whereby Pembina will become the Haisla Nation's partner in the development of the proposed Cedar LNG Project. The Project is strategically positioned to leverage Canada's abundant natural gas supply and British Columbia's growing liquefied natural gas infrastructure to produce industry-leading low–carbon, low-cost Canadian LNG for overseas markets.

Plains All American and Hartree Partners, LP today announced the execution of definitive agreements whereby Plains will sell its Pine Prairie and Southern Pines natural gas storage facilities to an affiliate of Hartree for a total cash consideration of $850 million.

SunCoke Energy announced that it intends to offer to sell, subject to market and other conditions, $500 million aggregate principal amount of senior secured notes due 2029 in an offering that is exempt from the registration requirements of the Securities Act of 1933, as amended.

MARKET COMMENTARY

U.S. stock index futures fell as investors maintained a cautious stance ahead of key inflation data later in the week. European stocks were higher, supported by travel and real estate shares, but weak German industrial output data and doubts over the United Kingdom lifting restrictions later this month capped gains. Japan's Nikkei stock index ended lower, dragged down by losses in heavyweights, including Softbank Group. The dollar gained, while gold prices dipped. Oil prices fell, but overall optimism about strong demand recovery limited losses. U.S. trade balance data and JOLTS report are on the economic radar for the day.

Source: NASDAQ

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