Energy Stocks in Positive Territory; Department of Energy Awards SPR Contracts, Red Sea International Task Force Formed
US equities closed higher on Tuesday afternoon, adding to gains achieved on Monday, while WTI and Brent reversed early losses in response to a weaker Dollar, Red Sea-related headlines and Russian crude export data.
The S&P 500 Energy Index closed up +1.09% versus the S&P 500 which rose +0.48%. The XLE settled up +1.06% and the XOP finished the day up +1.15%. WTI rose +1.6% to $73.66, Brent gained +1.8% to reach $79.38, and Natural Gas closed down (0.4%).
Notable gainers during the day were HF Sinclair ($DINO) which was up +2.6% after the company entered a stock purchase agreement to buy another 894.5K shares from REH Company for $55.90 a share, and Kinetik Holdings ($KNTK) rose +1.1% following Citi resuming coverage with a Neutral rating. The day’s decliners were Permian Resources ($PR) which fell (1.7%) on announcing a secondary offering of 39.41 million shares priced for total gross proceeds of $512 million with Permian purchasing 2.25 million shares. Comstock Resources ($CRK) dropped by (0.5%) after Siebert Williams Shank initiated coverage with a Hold rating, and Gulfport Energy ($GPOR) was down (0.9%).
Top performers in the PRISM Oil & Gas Index were Houston American Energy Corp ($HUSA) which soared +5.88% during the day, KLX Energy Services ($KLXE) which rose +5.15% and Ring Energy, Inc. ($REI) which gained +5.06%. Index decliners included Trio Petroleum ($TPET) which settled down (5.85%), Imperial Petroleum ($IMPP) which lost (4.29%) and Spindletop Oil & Gas ($SPND) which finished the day at (1.63%). The PRISM Oil & Gas index value is $138.50 and performance is up by +38.50% since inception.
Trader’s Lens
$BATL in the Prism MarketView Oil & Gas index was acquired by Fury Resources for $9.80 per share or approximately $450 million.
Light Crude Oil – Continuous Contract
Around $65 looks to be an important price point and support level for Light Crude.
PRISM Analysis: Why Did Battalion Oil Shares Soar on Friday?
Shares in Battalion Oil Corporation (NYSE American: BATL) surged more than 80% on Friday after the company announced it has agreed to be acquired by Fury Resources, Inc. for $9.80 per share in cash, which represents a total transaction value of approximately $450 million. The transaction is expected to close in the first quarter of 2024.
Today’s Top Headlines
Department of Energy Awards Contracts for Strategic Petroleum Reserves (SPR) repurchases
Today, the Department of Energy’s Office of Petroleum Reserves awarded contracts for the acquisition of 2.1 million barrels of US-produced crude oil for the SPR, bringing the total to three million barrels for delivery to the Big Hill SPR storage site in February 2024. The 2.1 million barrels are being purchased for an average price of $74.23 per barrel, an attractive deal given SPR crude was selling for an average of $95 per barrel in 2022. Seven companies responded to the DoE’s Request for Proposal (RFP) and the contracts were awarded to three companies.
Operation Prosperity Guardian
The Norwegian Maritime Authority has raised its alert level for the southern Red Sea to its highest levels, asking Norwegian ships to avoid the area.
The Authority said, “We have recently seen several serious attacks on civilian ships. Even if the militia behind it claims this only affects ships that have links to the conflict in Israel, it is uncertain which information is used to attack ships, and we now feel compelled to raise it to the highest level.”
The US, the UK, Bahrain, France, Canada, the Netherlands, Italy, the Seychelles, Spain and Norway have agreed to create a Red Sea naval task force called “Operation Prosperity Guardian” whose goal is to ensure “freedom of navigation for all countries and bolstering regional security and prosperity”, according to Defense Secretary Lloyd Austin.
US Strategic Petroleum Reserve Adds 600K Barrels
The US Strategic Petroleum Reserve stockpiles rose by more than 600,000 barrels last week, according to the Department of Energy (DoE). The total barrel count now stands at 352.5 million. Sweet crude stockpiles were unchanged at 143.8 million and sour crude stockpiles rose to 208.8 million.
