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Speculation About OPEC Raising Production Hangs Over Energy Sector .

Daily energy market commentary provided by Nasdaq Corporate Solutions Advisory Services' Energy Team.

Speculation About OPEC Raising Production Hangs Over Energy Sector

Thursday, June 14, 2018

Sector Commentary

Energy stocks are set to rebound from the recent slide in the sector, which closed with daily losses in three out of the last four sessions.  However, pressure from speculation that OPEC will raise production at its upcoming bi-annual meeting may remain as an overhang on the equities, as will unrelenting U.S. production, and despite well documented domestic takeaway bottlenecks which could potentially backup production flow.

Oil prices rose modestly, but were likely to remain under pressure from evidence of rising U.S. output and uncertainty over the outlook for supply before a meeting next week of the world's largest exporters.  "At OPEC’s meeting in a good week’s time, Saudi Arabia apparently plans to make several proposals that all boil down to increasing production on a one-off or gradual basis by between 500,000 and 1 million barrels per day," Commerzbank analysts said in a note.  "Iran has already signaled that it will resist any such attempts and blames the U.S. for the price rise. According to sources close to OPEC, Venezuela and Iraq are also not in favor of raising production."

Natural gas futures were off by less than 1%, as prices pulled back after reaching 5-month highs over the last two days.  Weekly inventory data is due out later this morning, with analysts expecting utilities likely added 90 bcf into storage during the week ended June 8, which would be the third straight week that injections were below normal since July 2017.

INTERNATIONAL INTEGRATEDS

Reuters - Equinor extends existing contract with Kongsberg into phase 2 of Johan.

Reuters - Gazprom said it cancelled its plan to issue sterling eurobonds in June due to the dispute over Ukraine's state-owned energy firm Naftogaz.

Press Release - TechnipFMC and DOF Subsea announced that the Skandi Recife, commenced its 8-year charter contract with Petróleo Brasileiro. The vessel will work in the Campos, Santos and Espírito Santo basins.

(Late Wednesday) Press Release - Repsol announced that it has agreed to sell its shares in the Repsol entities holding its Papua New Guinea assets to Balang International, subject to customary conditions precedent for a transaction of this nature.

U.S. E&PS

Press Release - Pioneer Natural Resources announced that it has signed a purchase and sale agreement with Evergreen Natural Resources LLC to sell all of its assets in the Raton Basin in southeastern Colorado for $79 million, subject to normal closing adjustments. The transaction is expected to close by the end of July 2018, subject to the satisfaction of customary closing conditions.

Press Release - Matador Resources announced that a wholly-owned subsidiary of its midstream joint venture, San Mateo Midstream, has entered into a long-term agreement with a significant producer in Eddy County, New Mexico relating to the gathering and disposal of such producer’s salt water. The agreement includes the dedication of over 65 wells, which are located within five miles of San Mateo’s existing salt water gathering system in Eddy County, New Mexico.

W&T Offshore was reestablished with ‘buy’ rating at Seaport Global Securities.

CANADIAN E&PS

AltaCorp upgraded Pengrowth Energy to ‘Sector Perform’ from ‘Underperform’.

OILFIELD SERVICES 

Press Release - CGG completed the Pre-Stack Time Migration of its 2,500-sq-km Dunquin multi-client survey acquired in Block 44 of the Porcupine Basin, west of Ireland, in 2017. Dunquin is the latest in a series of multi-client surveys that CGG has recently been acquiring in the area, totaling 10,500 sq km of 3D and around 2,000 km of long-offset 2D broadband data. PSDM products for its 2016 Galway and Cairenn surveys were delivered last year.

Press Release - ION Geophysical announced the second sale of a number of its highly differentiated optical magnetic heading sensors to enable subsea vehicles to quickly reach their desired destinations. In the fourth quarter, successful field trials demonstrated the advanced compasses' accuracy and robustness in GPS-deprived environments and led to delivery of the first commercial order in the first quarter.

Press Release - TechnipFMC and DOF Subsea announced that the Skandi Recife, commenced its 8-year charter contract with Petróleo Brasileiro. The vessel will work in the Campos, Santos and Espírito Santo basins.

REFINERS

(Late Wednesday) Reuters - Valero Energy is working to restart the small crude distillation unit at its 335,000-barrel-per-day Port Arthur refinery, Texas.

MLPS & PIPELINES

(Late Wednesday) Press Release - TransCanada announced the appointment of a new independent director, Randy Limbacher, effective June 13, 2018.

MARKET COMMENTARY

U.S. stock index futures were flat after the Federal Reserve projected a slightly faster pace of interest rate hikes, with focus also on the European Central Bank, which is expected to wind down its 2.55 trillion euro stimulus program. Global stocks wilted and the euro rose against the dollar. Gold prices rose. Brent crude prices fell, under pressure from rising U.S. output and uncertainty over OPEC supply outlook. Retails sales, weekly jobless claims and import prices data are scheduled for release.

NASDAQ ENERGY TEAM IN THE NEWS

CNBC “Squawk Box”

Oil price decline 'temporary', says pro

May 31, 2018

Tamar Essner, Nasdaq Corporate Solutions energy director, provides her outlook on oil as prices decline amid production volatility.


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.

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