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Msg  138277 of 139054  at  8/3/2022 8:47:35 PM  by

MikeyHorse


MARKET TALK 08/02

 The latest Market Talks covering Energy and Utilities. Published exclusively on at 4:20 ET, 12:20 ET and 16:50 ET.
 
1455 ET - Natural gas prices in the US close the day 7% lower at $7.706/mmBtu amid market uncertainty regarding late-summer weather trends, US LNG exports, and production levels. The selling has largely been due to profit-taking as prices have more than doubled since the start of the year and jumped more than 50% in July alone. "The futures continue to take it on the chin after a huge rally," says Dan Flynn at Price Futures, noting a trading range has been established between the upper $7's and the lower $8's as investors await more clarity on some of the key price-drivers. (dan.molinski@wsj.com)
 
1341 ET - Russian oil company Lukoil PJSC has offered to buy back dollar-denominated debt held by some foreign investors in a bid to avoid defaulting. New Russian laws require that companies obtain consent from the country's finance ministry to make foreign currency payments to investors in hostile countries like the US. Lukoil says that it's not guaranteed that it can get such a license, and even if it receives one, it may not be able to pay the full amount outstanding to foreign investors, "which may cause a potential event of default." The company added that it has sufficient cash to purchase all five outstanding dollar bonds it wants to repurchase and it will individually negotiate with creditors over the buybacks. (alexander.saeedy@wsj.com; @ajsaeedy)
 
1323 ET - Coal companies have been big winners in 2022 with Peabody Energy, Arch Resources, Australia's Whitehaven Coal and Glencore showing gains ranging from 19% to 140%, and coal now fetching $400 a metric ton from $134 at the start of the year. As Europe weans itself off Russian coal following the Ukraine war, countries are leaning on overseas suppliers. Germany, for example, boosted imports from Australia by 21% from March through May compared with the same period in 2021, according to customs data collected by Trade Data Monitor. German imports of South African coal in the same period were seven times what they were versus 2021, and German imports from Colombia were four times as much. German imports from the US increased by more than 10% over the same period. Pressure on suppliers is likely to continue. IEA forecasts global coal consumption this year will match the 2013 record. (rhiannon.hoyle@wsj.com and juan.forero@wsj.com)
 
1309 ET - US benchmark oil prices are switching into higher gear after trading flat this morning, with WTI crude now up 2.2% at $95.95 a barrel as it partially rebounds from yesterday's 4.8% decline. "Inventory data merits a close look this week starting with API numbers late today," says Robbie Fraser at Schneider Electric. Implied gasoline demand hit 9.2M bpd in last week's report, the 2nd-highest weekly showing of the year, but the 4-week-average is still about 7% lower versus a year ago. "Most downside risk continues to center on macroeconomic conditions, as well as weakness in refined fuel demand from the world's two largest consumers--the US and China," Fraser adds in a note. (dan.molinski@wsj.com)
 
1213 ET - EnQuest shares rise nearly 3% after the North Sea oil producer said 1H output at its Kraken oil field was above the top end of full-year guidance. Strong free cash-flow in the period allowed accelerated debt repayment, with net debt dropping $342M to $880M, including a buyback of some high-yield bonds, Panmure Gordon says. "Net debt/EBITDA ratio drops to c1.0x (from 1.6x) as EnQuest benefits from strong oil & gas prices," Panmure Gordon analyst Ashley Kelty says in a note. "A strong performance and investors will be delighted to see sharp drop in gearing." (philip.waller@wsj.com)
 
0932 ET - While drivers will still be hard-pressed to find a gas station selling gasoline for under $3 a gallon, the RBOB futures market is already there which might mean pump prices will soon also fall into the $2s in at least some states. The RBOB front-month gasoline contract closed yesterday at $2.9981 a gallon, the lowest since March 16 and the first close below $3 since March 14. This morning, RBOB trades 0.1% lower at $2.9960. AAA says the nationwide retail average now stands at $4.19 versus $4.82 a month ago and $3.18 a year ago. The cheapest state is Texas with a $3.69 average, while California's the highest at $5.59. (dan.molinski@wsj.com)
 
0924 ET - BP's Chief Executive Bernard Looney looks across the economic landscape and sees a "relatively complex picture," he tells analysts Tuesday on an earnings call. Gasoline sales are down from prepandemic levels, he says. "It is very hard to get a true sense of what is driving that. Is it price? Is it changing customer behaviors and patterns? Is it the impact of people worried about inflation and the recession today?" Diesel sales, on the other hand, are up 5% in the U.S., he says, benefiting BP's refineries, which are weighted toward diesel. Sales of aviation fuel are up 60% quarter-on-quarter, he says, but that is still not back to prepandemic levels. (jenny.strasburg@wsj.com; @jennystrasburg)
 
0855 ET - Demand for more ethanol in the US has Green Plains operating at nearly full tilt, the company says in its 2Q earnings. The Omaha-based ethanol producer says that 97% of its production capacity was in operation this quarter, in order to meet the 21% uptick in gallons sold versus this time last year -- with 231.4 million gallons of ethanol being sold. As a result, Green Plains says it consumed 80.2 million bushels of corn, versus 65.4 million bushels in 2021. The company calls the run rate 'historic,' and says that it is bringing several new locations online in the second half of the year, with another facility due to come online in mid-2023. (kirk.maltais@wsj.com; @kirkmaltais)
 
0843 ET - Ohio-based oil refiner Marathon Petroleum releases strong 2Q earnings amid high prices and strong demand that's been lifting the whole industry. "MPC adjusted EPS of $10.61/sh beat Cowen/consensus $9.23/$8.90," says Cowen Research in a note. "The beat was driven by $0.9B higher refining EBITDA than modeled on higher margins." Among the few negatives, the company says Marathon's Martinez Renewable Diesel project is still dealing with air-quality permit issues, so the company pushes back startup from 2H 2022 to mechanical completion by year end 2022. "We had previously noted the prior startup timeline was aggressive," notes Cowen. Shares rise 2.9% pre-market, though Cowen notes the market is beginning to look at refiners' declining margins ahead. (dan.molinski@wsj.com)
 
0501 ET - BP's share-price outlook depends on its renewable-energy strategy, Citigroup says following the oil major's record second-quarter results. The oil major's financial position is much stronger than 12 months ago, supporting higher shareholder distributions including a 10% dividend rise and an increase in forward guidance on share buybacks to $3.5 billion in 3Q, Citi says. Still, while the company's shares look cheap, the valuation is similar to those of key European peers, the bank says. "Therefore, at least in a relative sense, equity upside would look to depend on the market engaging with the New Energy pivot strategy, an engagement that we think might remain challenged in an environment where rates continue to rise," Citi analysts say in a note. (philip.waller@wsj.com)
 
0413 ET - Neste delivered a strong 2Q beat, driven by outperformance in oil products and renewable products, Berenberg analysts Henry Tarr and Daniel Bothe say in a note. Margins will continue to provide an earnings tailwind until capacity additions come online in 2023, they say. Near term, Neste continues to execute on its vertical integration strategy as well as navigating temporary cuts to biofuel, and the long-term backdrop continues to improve, they add. The U.S. Inflation Reduction Act looks to extend tax credits and includes a new sustainable aviation fuel tax credit, while a clean fuels production credit from 2025 is also being considered, they note. Berenberg lifts its price target on the stock to EUR57 from EUR50 and retains a buy rating. (dominic.chopping@wsj.com)
 
0347 ET - The FTSE 100 drops 0.1% to 7410 points as traders assess corporate results and as U.S. House of Representatives Speaker Nancy Pelosi is expected to visit to Taiwan, escalating U.S.-China tensions. Fresnillo is the worst performer, falling 4.9%, after the miner reported a sharp drop in first-half profit. Housebuilders decline after Nationwide data showed U.K. house prices rose at a slower month-on-month pace in July. BP is the bigger riser, up 4.1%, after the energy giant posted its highest quarterly profit in 14 years and raised its dividend. Software company Sage Group climbs 0.4% after saying it expects full-year organic recurring revenue growth to reach the top end of its guidance range. A weaker sterling also boosts multinational stocks. (renae.dyer@wsj.com)
 
(END)
August 02, 2022 16:50 ET (20:50 GMT)


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