Dow Jones Institutional News; New York [New York]. 17 Oct 2022.
The latest Market Talks covering Energy and Utilities. Published exclusively on at 4:20 ET, 12:20 ET and 16:50 ET.
1452 ET - US benchmark oil prices finish a volatile trading down 0.2% at a two-week-low $85.46 a barrel. WTI crude has now seen declines in five of the last six trading sessions as investors turn bearish over persistent worries of a stagflation--stagnant or shrinking economic growth and high consumer prices that keep economic activity stuck in neutral. But while crude-oil and gasoline futures fell today, diesel fuel prices stood apart by climbing a sharp 2.6% to close at $4.0852 a gallon. Diesel fuel has become a special case as its exports have risen sharply and now account for 30% of production, leaving domestic supplies 23% below normal and raising fears of US shortages. (firstname.lastname@example.org)
1249 ET - With WTI crude trading at $86 a barrel, banks are becoming a bit less eager to lend money to oil companies than six months ago when prices were soaring to 14-year-highs above $120, according to a twice-a-year survey from the law firm Haynes and Boone. "A meaningful percentage of survey respondents are predicting that borrowing bases will stay flat or even decrease slightly," says Kraig Grahmann, a partner at the firm which has been doing the Borrowing Base Redetermination Survey each spring and fall since 2015. The firm also says more oil and gas producers appear to be using "alternative capital providers," for capital, perhaps due to "more muted interest from banks, debt capital markets and equity capital markets." (email@example.com)
0948 ET - Diesel fuel futures jump 2.8% to $4.09 a gallon, which would put them on track to close at their highest level since June 28 as exports of the fuel eat up a larger portion of US output. "Diesel exports have risen to 30% of production," says Wells Fargo in a research note. "This level is approximately 500bps above the long-term historical trend and equivalent to 0.25mmbpd (1.75mmbbls/week) of additional export volumes." It says those numbers raise the specter of direct export policy change. US distillates inventories are 23% below normal at 106 million barrels, and could fall below 100M barrels this week or next for the first time since 2003. (firstname.lastname@example.org)
0925 ET - BP's acquisition of Archaea Energy is consistent with the group's growth ambitions in the biogas sector, Jefferies equity analyst Giacomo Romeo and equity associate Alexatrini Tsiknia say in a research note. However, the deal has a potential impact on 2023 buybacks, which could see a GBP1.9 billion reduction as the 60% surplus cash formula used by BP to set the buyback size includes cash outflows for acquisitions, they highlight. The large premium and the high near-term valuation metrics are also likely to raise concerns over the deal, they said. Jefferies has a hold rating on the stock and a price target of 490 pence. Shares are down 1.5% at 448.4 pence. (email@example.com)
0759 ET - Nel has announced a record NOK600 million purchase order for an alkaline electrolyzer system in the U.S., confirming the company's superior operational readiness, RBC Capital Markets analyst Erwan Kerouredan says in a note. "The award comes less than three months after Nel's previous record contract and shows that Nel stands among the very few manufacturers ready to cater to large-scale electrolyzer demand." Assuming a total order size of 220 megawatts, RBC says the deal suggests a selling price of around $250 a kilowatt, which is lower than Nel's average selling price historically but is typical of large contracts. RBC adds that this contract for Norway-built electrolyzers reflects the tightness of U.S. electrolyzer supply. (firstname.lastname@example.org)
0709 ET - European stocks gain as rising crude prices boost oil stocks, ahead of an expected higher open on Wall Street. The Stoxx Europe 600 and DAX advance about 0.8%, the CAC 40 climbs 0.7% and the FTSE 100 ticks up 0.6%. Brent crude increases 0.2% to $91.78 a barrel, lifting the likes of BP, Eni, Harbour Energy, Shell and TotalEnergies. IG futures data show the Dow opening at 29956, versus Friday's close of 29634. "In the U.S., we get the Empire manufacturing PMIs," Danske Bank senior analyst Bjorn Tangaa Sillemann says in a note. "Markets' focus will circle on politics this week with the EU council meeting Thursday, where an EU gas-price cap will be on the agenda." (email@example.com)
0703 ET - The purchase order Nel has received for its electrolyser equipment shows the Norwegian hydrogen company stands among the very few manufacturers ready to cater to large-scale electrolyzer demand, analysts at RBC Capital Markets say in a research note. The contract, worth NOK600 million, is for an alkaline electrolyser system for Woodside Energy Group's proposed H2OK hydrogen project in Oklahoma, U.S., and comes less than three months after Nel's previous record contract, the analysts say. Assuming a total size of 220 megawatt, this leads to a rounded selling price of roughly $250 per kilowatt, which, although lower than Nel's historical average selling price, is typical of large contracts and illustrates the scope of the work, the Canadian bank adds. (firstname.lastname@example.org)
0621 ET - Stellantis will produce 50% of its manufacturing energy needs within its own sites by 2025, its CEO Carlos Tavares says at the Paris Motor Show. In an interview with CNBC, the car maker's boss says the move is a significant step for more autonomy and frees up other sources of energy to be directed to citizens' needs. Tavares adds that Stellantis was "full speed on electrification", and that soon it will no longer be manufacturing pure internal-combustion engines. (email@example.com)
0329 ET - ING expects very tight natural gas markets over the winter months, keeping prices at uncomfortably high levels in the eurozone. Natural gas exports from Russia to the EU have been cut further and the sabotage of the Nord Stream 1 and 2 pipelines has created some fears regarding the safety of the gas pipelines from Norway, ING's chief economist for the eurozone Peter Vanden Houte says in a note. Unfortunately, according to the latest weather analyses, the risk of a cold winter has risen, he says. Moreover, because of the lack of natural gas imports from Russia, prices aren't likely to fall significantly in 2023. (firstname.lastname@example.org)
0206 ET - SK Innovation could post below-consensus 3Q earnings due to narrower oil-refining margins and a slower-than-expected pace of recovery in its battery segment, BNK Securities analyst H.T. Kim says in a research note. He expects the South Korean energy company's operating profit to plunge 24% on year to KRW468 billion, below the market consensus forecast of KRW971 billion, as weaker margins and heavier inventory losses weigh on its oil refining segment. He expects the company's battery business to turn profitable in 3Q 2023, rather than 1Q 2023. BNK cuts the stock's target by 17% to KRW250,000 but maintains a buy rating. The stock is 0.6% lower at KRW156,000. (email@example.com)
2319 ET - Origin's climate strategy now appears consistent with the Paris Agreement aim of limiting global warming to 1.5 degrees Celsius compared to pre-industrial levels, Hesta's general manager of responsible investment, Kim Farrant, says in a statement. The Australian pension fund says it welcomes Origin's move to sell its interests in the Beetaloo Basin and its intention to exit upstream exploration permits, a strategic direction change that better supports its aim to provide cleaner energy solutions. "As a result of this shift and together with information provided via ongoing engagement with Hesta, Origin has been removed from a 'watchlist' position," Farrant says. Still, Hesta believes Origin should consider how it can leverage its membership in industry associations to advocate for greater alignment with a 1.5-degree pathway. (firstname.lastname@example.org)
October 17, 2022 16:50 ET (20:50 GMT)