Dow Jones Institutional News ; New York [New York]. 11 Aug 2022.
The latest Market Talks covering Energy and Utilities. Published exclusively on at 4:20 ET, 12:20 ET and 16:50 ET.
1516 ET - US natural gas prices climbed to within a few cents of $9 before closing the session up 8.2% at $8.874/mmBtu, the highest closing price since July 26. Weather, which is often the main driver of natural gas prices, has actually turned mildly bearish in recent days as August temperatures have moderated slightly from July, reducing cooling demand. And today's weekly EIA storage report was bearish compared to forecasts as storage rose by a near-average 44B cubic feet. But as analysts at NatGasWeather.com note, bullish investors bought when prices dipped after the storage report, and kept pushing the market higher into the close. (email@example.com)
1446 ET - US benchmark oil prices finish at their highest level in more than a week, ending the session up 2.6% at $94.34 a barrel as rising demand for oil in Europe is expected to offset some of a drop in US gasoline demand. The IEA says global demand for crude could top 100M bpd by next year, noting some of that extra demand will come from Europe where power stations have been switching to oil as an electricity-generating source to avoid the high costs of natural gas. For tomorrow, oil markets will watch for the weekly Baker Hughes rig-count report. US drilling activity has slowed down in recent weeks. (firstname.lastname@example.org)
1256 ET - The global crude-oil benchmark Brent tops $100 for the first time in more than a week, recently up 2.7% at $100.04 a barrel, while WTI crude climbs 2.8% to $94.54. The IEA, in its monthly report this morning, lifted its global oil demand forecast for this year and next by 500k bpd apiece to 99.7M bpd and 101.8M, citing in part growing demand from Europe as high natural gas prices and other issues force power stations to turn to oil to generate electricity. Both major benchmarks, Brent and WTI, are more than $5 higher so far this week. (email@example.com)
1248 ET - Naturgy first-half results were in line with expectations on ordinary net income, but the company faces multiple headwinds, RBC Capital Markets analysts say in a research note. The Spanish energy company's ONI was EUR717 million, similar to consensus of EUR714 million, they say. But Naturgy has sold large amounts of its international LNG in the half, so won't benefit from the surge in spot prices in the coming quarters, the analysts say. It also faces a cap in Spain, which makes its retail offer uncompetitive, they say. And there are doubts on returns in new renewable installations, as well as gains from the company's split. These negatives, plus the company trading at a premium, mean RBC has a negative stance on the stock. Shares closed down 0.2% at EUR27.80. (firstname.lastname@example.org)
1105 ET - Refining company Delek US Holdings tends to be an afterthought to sector powerhouses like Valero, Marathon, Exxon and Chevron, and Delek's refineries are far from the Gulf Coast's so-called refinery alley, located instead in middle-of-nowhere spots like El Dorado, Arkansas, Krotz Springs, Louisiana and Tyler and Big Spring, Texas. But Goldman Sachs says Delek's stock looks like a winner. "We are Buy-rated on DK, and our 6-month SOTP and P/E-based price target is $33," it says in a note. "DK has substantial distillate leverage (>40%) across its refining assets, which we see as particularly competitive within our broader refining coverage and given our more structurally bullish distillate view." Delek shares rise 4% to $27.03. (email@example.com)
0852 ET - Natural gas prices in the US are pushing toward their highest levels since July 27, up 3% at $8.451/mmBtu and on track for a strong weekly gain after two consecutive weeks of declines. "This market is extending yesterday's strong advance with nearby futures posting 2-week highs amidst bullish spillover from a strong oil rally and favorable macroeconomic guidance off of yesterday's CPI," says Ritterbusch & Associates in a research note. It adds that these factors "have shifted focus away from an upcoming cooling trend across most of the US. However, production has ticked lower in adding to bullish sentiment." (firstname.lastname@example.org)
0849 ET - WTI oil is rising again, up 1.4% at $93.19 a barrel as an energy crisis in Europe forces it in some cases to revert to using oil rather than less-pollutive sources to generate power to its electricity grids. WTI crude is up $4 this week, fueled earlier in the week by a bounce in US gasoline demand and a Russian oil pipeline resuming operations after a sanctions-related shutdown. This morning's oil gains were triggered by Paris-based IEA lifting its demand forecasts. "The IEA monthly oil report [is] forecasting stronger oil demand growth as a result of price incentivized gas-to-oil switching in some countries," says Craig Erlam at Oanda in a research note. (email@example.com)
0713 ET - Petrofac shares edge 0.4% higher after the oil-industry engineer reported a first-half loss, but said it was optimistic about the second-half outlook. The company's 23% fall in 1H revenue on year matched its estimate and management's expectations, Investec says. "Encouragingly, new guidance in today's update is that awards in 2H22 could now be more evenly spread over the period, rather than the 4Q weighting as guided previously. This could mean positive newsflow catalysts sooner than we expected," Investec analysts say in a note. (firstname.lastname@example.org)
0620 ET - Nel's 2Q 2022 results were mixed, with a healthy order intake but a sharply negative Ebitda that has worsened year-on-year, Citi analysts say in a note. The Norwegian hydrogen company saw backlog growth of 12% sequentially, and has also taken the decision to invest in a second production line for alkaline electrolysers at its factory in Norway. The outlook highlights a strong pipeline, but nearer-term, Nel is being impacted by disruptions from Covid, the Ukraine war and raw material and logistics costs. "The results and investment decision point to a good picture for future growth, but a challenging operational environment today that is leading to sharper Ebitda losses," Citisays. (email@example.com)
0544 ET - Orsted reported 2Q results with Ebitda of DKK3.62 billion versus consensus of DKK4.8 billion, Citi analyst Jenny Ping says in a note. While Orsted upgraded its 2022 Ebitda guidance range, all of it comes from the biomass business, which isn't a core part of Orsted, she says. More interestingly, the core offshore wind business has meaningfully underperformed in 2Q due to a DKK2 billion negative effect from overhedging and ineffective hedges, she adds. "We struggle to see why this set of results should give confidence to investors on the main reason why one would own Orsted shares, for its core offshore wind unit." Citi rates at sell with a DKK688 target. Shares trade 5.2% lower at DKK807.60. (firstname.lastname@example.org)
0446 ET - The FTSE 100 Index edges 0.2%, or 12 points, lower to 7495 as losses for Antofagasta, construction and retail stocks offset gains for Entain, while oil stocks rise as crude prices edge higher. Entain rises 3% after the owner of bookmakers Ladbrokes and Coral reported higher revenue and reinstated its interim dividend. BP and Shell advance as Brent crude increases 0.2% to $97.54 a barrel. Still, Antofagasta drops 1.3% as the Chilean copper miner reported lower 1H profit, though other miners such as Glencore, Anglo American, Fresnillo and Rio Tinto make progress. Persimmon, Land Securities and Berkeley Group Holdings are among the biggest construction and property losers and retailers Marks & Spencer, JD Sports Fashion and Next also fall. (email@example.com)
2031 ET - Crude-oil prices are lower in early Asian trade. The decline in prices is likely due to the easing of global supply concerns as Russian pipeline operator Transneft has resumed supplying to the Druzhba pipeline toward Ukraine, write ANZ analysts in a research report. U.S. crude oil inventories also rose by 5.5 million barrels last week, driven by a gain in domestic output, ANZ adds. The front-month WTI contract is 0.6% lower at $91.41/bbl, and Brent crude futures are down 0.5% to $96.90/bbl. (firstname.lastname@example.org)
August 11, 2022 16:50 ET (20:50 GMT)