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Msg  137162 of 138393  at  5/15/2022 6:54:22 AM  by

MikeyHorse


Energy & Utilities Roundup: Market Talk

 

Dow Jones Institutional News ; New York [New York]. 13 May 2022.

 
The latest Market Talks covering Energy and Utilities. Published exclusively on at 4:20 ET, 12:20 ET and 16:50 ET.
 

0647 GMT - The FTSE 100 is expected to open 52.2 points higher, according to IG, having closed Thursday at 7233.34, tracking gains in many Asian stocks and with energy stocks likely boosted as crude oil prices rise. Stocks are expected to recover after sharp losses on Thursday and following a volatile week. Concerns about higher interest rates remain but there was some relief after comments from Federal Reserve Chairman Jerome Powell suggested that future rate rises would likely be by 50 basis points and not 75. Markets have shown some stability overnight but "risk sentiment remains high-strung," RBC analysts say. (jessica.fleetham@wsj.com)

0626 GMT - TotalEnergies carries significant Russia-related risk, but the oil major's ability to generate cash and its growth opportunities are attractive, Berenberg analysts say in a research note, upgrading their recommendation on the stock to buy from hold. The French company has upgraded its buyback for the first half to $3 billion, and Berenberg says the company's high cash flow and the current environment make it sustainable for it to continue buybacks at this pace. Its dividend yield is one of the highest offered in the sector, Berenberg says. TotalEnergies has potential to grow in Brazil, Mozambique, the U.S. and Suriname, the brokerage says. TotalEnergies still faces material risk from Russia, but this is largely priced into its shares, Berenberg says. (cristina.roca@wsj.com; @_cristinaroca)

0546 GMT - GS Holdings' 2022 earnings may get a boost from stronger-than-expected profit margins at its oil-refining and electric-power affiliates, according to research from Nomura analysts Cindy Park and Chloe Kim. They raise their full-year net-profit forecast for the South Korean holding company by 75%. They also lift the stock's target by 13% to KRW52,000 but retains its neutral rating, noting the oil-refining margin could slow from the current peak of $24.2 per barrel. The margin averaged $3.4 per barrel in 2021. The profit margin at its electricity affiliates could also taper off, they add. Shares are 1.7% higher at KRW47,650. (kwanwoo.jun@wsj.com)

0508 GMT - Singapore equities appear to be a safe-haven amid global headwinds, say Morgan Stanley analysts in a research report. Singapore's economic conditions look relatively robust, with a strengthening currency supporting capital inflows to the domestic market, they say. Rising interest rates work in favor of banks and the analysts recommend adding more exposure to banks. Morgan Stanley's revised Singapore Focus List consists of DBS, UOB, Sea Ltd., Keppel Corp. and Sembcorp Industries. Also, Morgan Stanley rolls forward its MSCI Singapore index target to June 2023 from December 2023 and lowers its index target to 1,650. The MSCI Singapore index is down 0.7% at 1,340.33, according to FactSet. (ronnie.harui@wsj.com)

2253 GMT [Dow Jones]--Viva Energy's refining strength was on display in the four months through April, and Jefferies analyst Michael Simotas is more positive on the medium-term outlook for refining than he was prior to the pandemic. Simotas, in a note, estimates Viva's refining earnings were around A$146 million in the four-month period, and margins are likely to remain significantly elevated through 1H. "Consequently, we forecast refining Ebitda (replacement cost) of A$262 million in 1H, which would represent circa 498% growth on the prior corresponding period," Simotas says. Jefferies has a buy call on Viva, with its price target lifting 6.7% to A$3.20/share. Viva ended Thursday at A$2.66. (david.winning@wsj.com)

1753 GMT - Just 14.9% of shareholders casting votes ahead of BP's annual meeting support a resolution demanding the London-based oil company step up its greenhouse-gas emissions reporting to show it's managing Paris-agreement climate targets--down from 21% who supported a similar resolution last year, according to provisional results. That compares with 88.5% of votes cast this year supporting BP's net-zero strategy. Follow This, the climate-focused shareholder group that filed the losing resolution, says the retreat shows that the energy crisis is eclipsing the climate crisis in investors' minds. "Investor sentiment apparently has changed, likely as a result of the energy crisis and windfall profits brought on by the war in Ukraine," Follow This founder Mark van Baal says. BP officials reject that notion, saying investors support the company's climate strategy. (jenny.strasburg@wsj.com)

1635 GMT - Shares of oil company Occidental are trading five times higher than two years ago when the stock was tumbling. CFRA's Stewart Glickman says in a research note, "OXY management is taking advantage of strong spot prices to improve the health of its balance sheet, which was stressed after the Anadarko acquisition ... OXY is 90% of the way towards its stated goal of cutting debt by $5 billion." He also says CFRA's new 12-month target of $70, up $5, reflects a 6x multiple of enterprise value to projected '23 EBITDA. Shares trade 1% lower. (dan.molinski@wsj.com)

1555 GMT - European markets pare some losses after a mixed start to trading on Wall Street. Having dropped nearly 2% earlier, the Stoxx Europe 600 retreats 0.7%, while the CAC 40 backtracks 1%, the DAX falls 0.6% and the FTSE 100 sheds 1.6%. Brent crude rises 0.5% to $108.08 a barrel. The Dow is 0.9% adrift, and the tech-heavy Nasdaq is off 0.4%. "Investors will have been hoping for a bounce and given oversold ratings across a host of markets, traders will have been expecting one," IG analyst Chris Beauchamp says. "But given the damage done in recent weeks and the still-strong fears about a recession, it seems silly to expect things to return to the orderly gains that prevailed in 2021." (philip.waller@wsj.com)

1509 GMT - This past January was the coldest January since 2014, and the electricity sector leaned heavily on natural gas to keep people warm, the EIA says in a research note. "In January 2022, natural gas consumed for electric power in the U.S. averaged 31.6 billion cubic feet per day, the highest January average on record and the highest amount for any winter month," the US government agency says. "In January 2022, natural gas-fired generators provided 36% of the nation's electricity, and coal provided 23%. In the previous five Januaries (2017-21), those shares had been much more similar: natural gas at 33% and coal at 27%, on average." Nuclear, solar and wind followed coal. (dan.molinski@wsj.com)

1232 GMT - US benchmark oil prices fall 1.7% to $103.88 a barrel in yet another reversal after prices surged 6% higher yesterday. Energy commodities have been pushed and pulled in both directions this week as investors watch uncertainty and turbulence in broader financial markets on Wall Street. Highly mixed oil data is also fueling a choppy trading market. US inventories of refined fuels such as diesel and gasoline have been declining sharply, which is price-supportive, but US demand for those very same fuels is falling, which is bearish. Additionally, analysts worry consumption rates could fall further if the US economy slips toward a recession. (dan.molinski@wsj.com)

1115 GMT - The U.S. Bureau of Ocean Energy Management carried out its second seabed auction this year with two sites based in Carolina Long Bay, Jenny Ping from Citi says. The winners, TotalEnergies and Duke Energy, will pay $160 million and $155 million respectively, implying a price of around $235 million per gigawatt, Ping says. This is meaningfully lower than the recent New York Bight auction at around $700 million/GW because of weaker wind speeds, she says. Competitive pressure will continue to be a headwind for developers such as Orsted, alongside input cost challenges and the potential need for equity, Ping says. Citi reiterates a sell recommendation for the Danish company. (jaime.llinares@wsj.com)

1026 GMT - Shell is a cash machine, Henry Tarr and David Eves at Berenberg say as they raise the target price to 2,750 pence and reiterate a buy rating on the U.K. energy giant. The stock is up 58% over the last 12 months but these analysts remain bullish as the shares are still trading below 2019 levels, when the oil price averaged $63 per barrel. In addition, Berenberg believes that commodity prices will need to remain elevated over the coming few years to incentivize the necessary investment into new energy supplies, and that is particularly the case for liquefied natural gas where Shell is the largest player, the bank says in a note. (jaime.llinares@wsj.com)

(END)



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