The latest Market Talks covering Energy and Utilities. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.
0402 GMT - S-Oil's refining margins could stay solid throughout the year, Daiwa Capital analysts Hyunmok Wang and Henny Jung say in a note. They initiate coverage of the stock with a buy rating and KRW85,000 target. The South Korea-based oil refiner, controlled by Saudi Aramco, could benefit from likely solid demand for transportation fuel and limited global refining-capacity increases, the Daiwa analysts note. As global oil producers could extend their output cuts until end-2024, S-Oil's refining margins could average $10 a barrel for 2024, they reckon. They expect demand for jet fuel to recover and global manufacturing activities to normalize this year. S-Oil shares are flat at KRW70,300.(kwanwoo.jun@wsj.com)
0329 GMT - Seatrium's recent corporate actions send a positive signal to the market, says OCBC Investment Research analyst Ada Lim in a research report. The Singapore shipyard group said last month its proposal for a 20-to-1 share consolidation had been approved by shareholders, with shares to begin trading on a postconsolidation basis Tuesday, notes Lim, adding that this move would allow Seatrium to shed its "penny stock" status. Also, Seatrium announced a S$100 million share buyback program and early redemption of S$500 million worth of floating-rate bonds due 2026, Lim adds. OCBC raises the stock's fair value estimate to S$2.73 from S$0.155 while maintaining a buy rating. Shares are unchanged at S$1.94. (ronnie.harui@wsj.com)
0044 GMT - Oil edges lower in early Asian trade following news reports that Russian Deputy Prime Minister Alexander Novak indicated OPEC+ could move to increase crude production. Although crude oil prices aren't technically in 'oversold' territory yet, with the daily relative strength index hovering around 35 on Brent oil contract, prices are showing some signs of stabilization around key technical levels, says Fawad Razaqzada, market analyst at City Index and FOREX.com, in an email. Brent oil has been testing a key support zone around $82.40/bbl-$83.00/bbl during the last couple of days, the analyst notes. Front-month WTI crude oil futures are down 0.2% at $78.23/bbl; front-month Brent crude oil futures are 0.25% lower at $82.95/bbl. (ronnie.harui@wsj.com)
2338 GMT - Macquarie trims its earnings outlook for Imdex to reflect limited visibility about when drilling activity will pick up but remains bullish on the stock. Macquarie's FY 2024 EPS forecast falls 8.6%, while its FY 2025 and FY 2026 views are lowered by 9.1% and 8.1%, respectively. Still, it highlighted emerging tailwinds for Imdex, including a potentially large shortfall in copper supply from 2027 and a forecast drop in gold resources for the 20 largest producers over time. "Key commodity prices have increased recently with gold and copper comprising 75% of exploration activity," Macquarie says. "Despite this, global exploration budgets are yet to follow, and while capital raisings have improved, the improvement is from a small base." (david.winning@wsj.com; @dwinningWSJ)
2329 GMT - Macquarie thinks AGL Energy's more bullish assessment of consumer demand compared to rival Origin Energy reflects its less aggressive push into generating solar power. AGL said higher consumer demand over summer in Australia's eastern states of New South Wales and Queensland was a key driver of its profit upgrade yesterday. Macquarie notes the contrast with Origin which reported flat retail electricity volumes in 3Q. AGL now expects underlying Ebitda of A$2.12 billion-A$2.20 billion in FY 2024, and an underlying net profit of A$760 million-A$810 million. Macquarie raises its own forecast for underlying net profit by 5%, to A$790 million. (david.winning@wsj.com; @dwinningWSJ)
2000 GMT - The Energy Department is again seeking bids to refill the Strategic Petroleum Reserve as oil prices move back below the $79-a-barrel cap it set itself for the replenishment. The DOE announced solicitations for up to 3.3 million barrels to be delivered in October. In April, it canceled planned purchases of 1.5 million barrels each for August and September when prices jumped above $79 a barrel. The DOE says it has bought 32.3 million barrels of oil for an average price of $76.98, and accelerated nearly 4 million barrels of exchange returns, compared with $95 a barrel it received from the 2022 emergency sales. Front-month WTI on Nymex settled today at $78.38 a barrel, with the October contract at $76.76.(anthony.harrup@wsj.com)
1913 GMT - Crude futures lose ground in an up-and-down session as the market weighs geopolitical risk against concerns about demand. "Speculative traders have been bucked off the 'crude bull' over the last two weeks as geopolitical risk has been deflating, fundamentals have weakened, and the macro-economic environment has become more uncertain," says Rebecca Babin, senior energy trader at CIBC Private Wealth US. Failure by Hamas and Israel to reach a cease-fire agreement is likely to have little impact on prices as meaningful supply disruptions aren't expected. Prices are approaching the bottom of the range, but "fundamental, technical and macro headwinds indicate that it is too soon to get back on the bull," Babin adds. WTI settles down 0.1% at $78.38 a barrel and Brent slips 0.2% to $83.16 a barrel. (anthony.harrup@wsj.com)
1829 GMT - EVgo is framing Tesla's unexpected layoffs in its charging network business as a positive. CEO Badar Khan says on a call with analysts that if the move by Tesla will allow for more affordable vehicles, that is a net positive for the industry. Khan says affordability is key to adoption, and he points out that companies like EVgo are adding public charging stations at a faster pace than in previous years. He's also not worried about spooked investors: "I expect capital will be more interested in participating in the space in this new competitive context, allowing companies like EVgo to plug the gap left behind," he says. EVgo shares fall 11%. (ben.glickman@wsj.com; @benglickman)
1353 GMT - Crude futures are unable to hold overnight gains spurred by Israel's move on Rafah and attention turns to supply and demand. News that no agreement between Israel and Hamas was reached has little effect as "no significant amount of oil is being taken off the global market," Dennis Kissler of BOK Financial says in a note. "Traders are now concentrating more on fuel demand and interest rates which both are becoming pressure points for prices." Comments by Russia's deputy prime minister that OPEC+ has the option of raising output adds a bearish twist, while expectations remain that the producer group is likely to extend cuts when it meets in June. WTI and Brent are down 0.6% at $78.03 and $82.85 a barrel, respectively. (anthony.harrup@wsj.com)
1334 GMT - U.S. natural gas futures edge down after three days of gains supported by lower U.S. production and a pickup in LNG feedgas demand. The rally is limited by the high storage surplus, which isn't expected to recede significantly in the near term. While further upside is likely into mid-summer "pockets of weakness are likely to emerge in the next few weeks, with laggard Henry Hub spot prices and weather-driven demand reaching an annual low," Eli Rubin of EBW Analytics says in a note. Natural gas is off 0.1% at $2.192/mmBtu. (anthony.harrup@wsj.com)
1246 GMT - British oil giant BP will cut costs through streamlined relationships with suppliers, scaling up its lower-cost engineering and IT workforce in India, and potential cuts to its portfolio and workforce "in some geographies," CEO Murray Auchincloss says after the company's first-quarter earnings missed expectations. BP says it intends to slash cash costs by at least $2 billion by the end of 2026 compared with 2023. BP will use more artificial intelligence in areas ranging from subsea engineering to advertising campaigns, and will "focus on a few bits of the portfolio that we let go that will reduce costs," Auchincloss says. Some of the workforce moves might lead to restructuring charges, BP says. BP shares trade down less than 1% in early-afternoon London trading. (jenny.strasburg@wsj.com; @jennystrasburg )
1238 GMT - Jefferies retains a hold call on MEG Energy in the wake of in-line 1Q results and unchanged guidance, with the analysts positive on the energy company for its pure-play oil sands exposure and visibility on debt targets that are now fairly reflected in the share price. Production was as expected, as was cash flow per share, Jefferies says. It notes MEG trades at 4.6 times estimated debt-adjusted cash flow versus oil sands peers on 5.3 times and the broader North American oil peer group on 4.6 times. Jefferies has a C$35 target on the shares, which last closed at C$31.56. (robb.stewart@wsj.com; @RobbMStewart)
(END) Dow Jones Newswires
May 08, 2024 04:20 ET (08:20 GMT)
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