Oil & Gas Bulletin
WTI and Brent Reverse Losses; Natural Gas Settles Up; Oil Services Slide on Saudi Investment Pause
Dow +0.35%, S&P 500 (0.06%), Nasdaq (0.76%), Russell 2000 (0.76%)
US equities finished the day mostly lower on Tuesday with small-caps underperforming and oil-services names hit by the Saudi investment pause. Treasuries closed mixed, the Dollar index was down (0.1%) and Gold settled up +0.3%.
WTI crude and Brent reversed earlier losses to close at +1.4% and +0.6% respectively as the market waits on the U.S. military response to an attack on soldiers in Jordan that left three dead and more than 40 injured. Natural gas closed up +1.4% as production pulls back after recovering on Monday. The S&P 500 Energy Index closed up +1.01% versus the S&P 500 which was down (0.06%). The XLE is up +1.03%, the XOP is up +1.81% and the majority of oil E&Ps and all gas E&Ps finished the day higher.
Tuesday’s notable energy gainers were Helmerich & Payne ($HP) which gained +12.5% after reporting 1Q24 results with revenue, EPS and adjusted EBITDA better-than-expected. The company announced a preliminary notification of a contract award of seven super-spec FlexRigs for work in a drilling campaign in the Middle East. Marathon Petroleum ($MPC) was up +6.0% on reporting strong Q4 results beating EPS and EBITDA. The company bought back $2.5 billion in stock during 4Q23 and another $900 million in January.
Permian Resources ($PR) has risen +2.5% after announcing the closing of the sale of some legacy ESTE assets, and acquired Eddy County assets for $175 million and announced acreage trade. Tudor Pickering Holt reiterated a Buy rating for the company. MPLX ($MPLX) gained +1.1% after its Q4 results came in better than expected, while 2024 capex guidance is slightly higher than expected due to increased growth spending, and Williams Cos. ($WMB) was up +0.9% after announcing a quarterly dividend increase of +6.1%.
Top performers in the PRISM Oil & Gas Index were Independence Contract Drilling ($ICD) which rose by 5.63%, Ring Energy ($REI) which gained 5.11% and Epsilon Energy ($EPSN) which gained 2.89%. Index decliners were Trio Petroleum ($TPET), which fell by (13.51%), Permex Petroleum ($OILCF) which dropped by (4.76%), and InPlay Oil ($IPOOF) which was down by (3.24%) at the closing bell. The PRISM Oil & Gas index value is $138.10 and performance is up by +38.10% since inception.
Today’s Top Headlines
WTI and Brent Reverse Earlier Losses After US Soldiers Killed in Jordan
WTI and Brent recovered from session lows of $75.85 and $81.35 after President Biden announced that Iran was responsible for supplying weapons in the most recent attack on US soldiers in Jordan. Three soldiers died and more than 40 were injured in the attack, which added to supply disruption fears as tensions heighten between Washington and Tehran. The President said he had decided on how the US will respond.
Saudi Aramco to Halt Production Capacity Expansion
Saudi Arabia’s government has ordered oil company, Aramco, to halt its oil expansion plan and to target a maximum sustained production capacity of 12 million barrels per day (bpd). Saudi Arabia is the world’s largest oil exporter. Morgan Stanley analysts said that the lowered capacity target could reflect “a government expectation that demand for its oil will no longer rise as strongly as previously expected”. According to Reuters, the decision is driven by a weak market, not a policy shift.
DOE Awards Contracts for SPR Refill
Today, the U.S. Department of Energy’s (DOE) Office of Petroleum Reserves announced that contracts have been awarded for the acquisition of 3.1 million barrels of U.S.-produced crude oil for the Strategic Petroleum Reserve (SPR). The 3.1 million barrels will be delivered in May and are being purchased for an average price of $78.14. The DOE has purchased a total of 20.13 million barrels of oil for the SPR and analysts expect it to issue a new solicitation to purchase oil for SPR replenishment for a June delivery date later this week. A total of 7 companies responded to the RFP, submitting 26 proposals, and the contracts were awarded to four companies.
DOE Adds 900K Barrels to Strategic Petroleum Reserve\
The Department of Energy added 900K barrels of crude to the SPR last week, taking total stockpiles up to 357.4 million. All the increase came in sour crude with stockpiles, rising to 213.6 million.
North Dakota Offline Production Declines
The North Dakota Pipeline Authority has announced that offline production has declined further due to recent extreme cold, reaching 10K bpd to 40K bpd. On Friday the state produced 30K to 80K bpd.
