Dow Jones Institutional News; New York [New York]. 16 June 2022.
The latest Market Talks covering Energy and Utilities. Published exclusively on at 4:20 ET, 12:20 ET and 16:50 ET.
1625 ET - Oil-and-gas companies should remain focused on profits and stick to capital discipline despite high commodity prices, according to a survey that consulting firms Bain & Co. and Rivel conducted with 89 investors and analysts. Only 16% of the respondents point to oil and gas production growth as highly important in determining investment decisions in the sector, the lowest percentage among 10 factors, the survey shows. In contrast, 82% of the respondents say reliable cash flow is highly important, while 73% consider track record of shareholder return as such. "Investors are open to oil-and-gas companies participating in lower-carbon markets," Bain and Rivel adds. (email@example.com; @lhvgarcia)
1449 ET - Natural gas prices end the session relatively little changed from where they began, closing 0.6% higher at $7.464/mmBtu after a weekly EIA storage report came in close to analysts' expectations. The EIA report showed inventories rose last week by 92B cubic feet, which is only slightly higher than the 90-bcf injection analysts in a WSJ survey were forecasting. Prices have fallen by around 17% since a major LNG exporter, Freeport LNG, announced a plant shutdown in Texas that could last until late 2022 and could seriously reduce gas demand and cause US inventories to rise. Next Thursday's storage report may be the first real test of how Freeport's shutdown is impacting inventories. (firstname.lastname@example.org)
1444 ET - US benchmark oil prices stage a late-session rebound to finish 2% higher at $117.58 a barrel after falling toward a three-week-low of $112 earlier in the day. The choppy trading environment still leaves WTI crude more than $3 lower for the week heading into Friday. Bob Yawger at Mizuho says reported comments by Russian Deputy Prime Minister Alexander Novak that he wouldn't rule out $150-a-barrel oil by the end of the year helped kickstart the buying, and helped free the oil market from being swept up in broader-market risk aversion. For tomorrow, investors will watch for the weekly Baker Hughes rig-count report at 1 pm ET. (email@example.com)
Henry McVey is Chief Investment Officer (CIO) of KKR's Balance Sheet and Head of Global Macro. "KKR CEO Predicts Infrastructure Capital-Expenditure 'Supercycle' -- Market Talk," at 1:31 p.m. ET incorrectly referred to McVey as the CEO in the headline.
1331 ET - KKR's Henry McVey calls for a "complete rethinking of asset allocation," and points to significant opportunity behind "mega themes" like energy transition and security, from defense and critical infrastructure to healthcare and consumer data. The need to build more resilient energy transportation, from pipelines to power grids and supply chains, McVey says in a midyear update, could create a capital-spending supercycle. From a cash deployment standpoint, KKR's head of global macro and asset allocation said, "we remain in a walk, not run stance, until the Fed has inflation more under control and/or corporate profit estimates look more achievable. KKR lowers its S&P 500 2022 and 2023 targets and incorporates a "modest earnings recession," with an expected 5% EPS year-over-year decline in 2023. (firstname.lastname@example.org; @mjarmental) Corrections & Amplifications
This item was corrected at 2:35 p.m. ET to show that Henry McVey is Chief Investment Officer (CIO) of KKR's Balance Sheet and Head of Global Macro. An earlier version incorrectly referred to him as CEO in the headline.
1204 ET - Shares in oil and gas companies are having one of their worst weeks of the year as crude-oil prices fall amid a broader sell-off across financial markets on worries of economic slowdown and weakening demand. Many shares rose to or near all-time highs last Wednesday, June 8, but have been speeding downhill since. The exchange-traded energy sector fund XLE is down 15% since last Wednesday including a 4.5% drop today, while Exxon is 12% lower after closing at an all-time high $104.59 last Wednesday. Today, the Texas-based company's stock is down 2.8%. ConocoPhillips trades 4.8% lower today. (email@example.com)
1102 ET - Natural gas prices rise 5.8% to $7.847/mmBtu after a weekly EIA storage report saw inventories rise by an amount near to what analysts were expecting. EIA says gas-in-storage rose by 92B cubic feet last week from the previous week's slightly-revised levels. That's higher than the 79-bcf average rise, and just above forecasts in a WSJ survey for a 90-bcf injection. Total storage is now 2.095T cubic feet, which is 14% below last year and 13% below the five-year-average. (firstname.lastname@example.org)
0939 ET - As politicians, oil companies and others play the blame game on high oil and gasoline prices, the market might be quietly starting to fix the problem all by itself. WTI crude, which closed above $120 for four straight sessions through Monday--something not seen since 2008--has been declining since, recently down 1.1% at $114.02 a barrel. WTI is more than $6 lower for the week, potentially setting up the first weekly decline in eight weeks. Retail gas prices, too, are starting ever-so-slowly to decline, with AAA reporting two straight days of tiny declines after the nationwide average hit an all-time high $5.02 a gallon on Tuesday. The price today is $5.009. (email@example.com)
0618 ET - German utility companies E.ON and Uniper should be shielded from material financial losses from cuts to the supply of Russian gas, Bank of America analyst Peter Bisztyga says in a research note. Germany recently reformed the Energy Security Act, allowing gas supply companies to pass on higher prices to customers in case of a halt to Russian gas flows, the analyst says. Russia's Gazprom said Wednesday that flows through the Nord Stream pipeline to Germany would be further curtailed, a day after it cut exports on the route by 40%. "Overall, we took some comfort that neither company would be exposed to material financial losses if Russian gas supply is curtailed, but there remain several unanswered questions," BofA says. E.ON shares fall 7.4%, while Uniper trades 8.8% lower. (firstname.lastname@example.org; @_cristinaroca)
0445 ET - Aker Carbon Capture's involvement in projects such as the Keadby 3, which could become the first power station equipped with carbon capture in the U.K., may help the company gain market share, especially in Europe, analysts at Citi say in a research note. The carbon tech company has been awarded a front-end engineering and design contract to capture up to 1.5 millio3n metric tons of carbon annually once the plant, which SSE Thermal and Equinor are developing in North Lincolnshire, becomes operational. Aker is targeting 10 million metric tons of carbon a year in contracts awarded by 2025 and so far has reached 4.5 million metric tons of carbon a year, Citi says. Securing front-end engineering and design contract studies for industrial hubs and converting these into development projects is key to winning market share, it notes. (email@example.com)
0436 ET - Italian energy major Eni's shares shouldn't experience a significant hit from a 15% reduction in gas supplies from Russia's Gazprom, Equita analyst Massimo Bonisoli says in a research note. A drop of that sort is a relatively normal event, the analyst says, noting that the drop in volumes experienced at the end of April was bigger. "We believe that Eni can 'easily' cope with a 15% drop in Russian volumes and fulfill existing contracts that we believe are for volumes significantly lower than import levels," the analyst says. Nevertheless, the fact that Gazprom didn't explain this most recent move may create worries around supply stability, the analyst says. Eni shares trade down 1.5% at EUR13.05. (firstname.lastname@example.org)
June 16, 2022 16:50 ET (20:50 GMT)