On Concerns Of Global Recession, Oil Prices Are Still Plunging

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  • WTI and Brent crude oil futures extended yesterday’s retreat into today’s session as recession fears and a flare-up in COVID-19 cases in China raised concerns over global demand.
  • The World Bank President and IMF Managing Director warned yesterday of a growing risk of global recession and said that inflation remains a continuing problem.

A recent news article published in the NASDAQ states that Oil Prices Continue Fall on Recession Fears, Low Global Demand.

Energy sector is poised for a lower start

The energy sector is poised for a lower start, weighted down by further weakness in the underlying commodities and in the major equity futures which continued to fall on lingering recession fears, escalation in the Russia-Ukraine war and reports China is ramping up COVID-19 measures. Traders are also sitting idle ahead of the start of earnings season with the big banks set to begin announcing results tomorrow.

WTI and Brent crude oil futures extended yesterday’s retreat into today’s session as recession fears and a flare-up in COVID-19 cases in China raised concerns over global demand.

The World Bank President and IMF Managing Director warned yesterday of a growing risk of global recession and said that inflation remains a continuing problem.

Authorities have stepped up coronavirus testing in Shanghai and other large cities as COVID-19 infections rise again. Oil also came under pressure from a strong dollar, which hit multi-year highs on worries about increases to interest rates and escalation of the Ukraine war. Losses were underpinned by a tight market and last week’s decision by the OPEC to lower their output target by 2 million barrels per day.

Natural gas futures continued to move lower for the third-straight session, pressured by reports showing record production levels which outweighed forecasts for higher gas demand over the next two weeks.

Refinitiv projected average U.S. gas demand, including exports, would rise from 90.1 bcfd last week to 92.3 bcfd this week and to 95.4 bcfd next week.

They also stated that average gas output in the U.S. Lower 48 states rose to 100.1 bcfd so far in October from a monthly record of 99.4 bcfd in September.

BY SECTOR:

US Integrateds 

Exxon Mobil’s French business Esso is trying to resume operations as soon as possible now that an agreement has been accepted by two trade unions, but the restart will depend on the decision made by the next shift of workers, a spokesperson said.

A twenty-second consecutive day of strike action is underway at Exxon’s French refineries, said the CGT trade union, adding that the CGT was not privy to an earlier agreement signed by the CFDT and CFE/CGC unions.

Exxon Mobil is considering a takeover of oil and gas producer Denbury and the talks are at a preliminary stage, Bloomberg News reported, citing people familiar with the matter.

International Integrateds 

Italy could face a gas shortfall of 5-6 billion cubic meters in the winter of 2023-24 without a new regasification terminal, the CEO of Eni Claudio Descalzi said.

The first cargo of vegetable oil for biorefining produced by Eni in Kenya has left the port of Mombasa, on its way to Gela’s biorefinery. This marks the start of the transport and logistic system that will support the value chain in the country, starting with a production of 2,500 tons by the end of 2022 to scale up rapidly to 20,000 tons in 2023.

Japan Oil, Gas and Metals National Corporation has agreed with Saudi Aramco to collaborate on project support, technology development and human resource development related to the production and/or storage of hydrogen and fuel ammonia, which are expected to be low carbon energy sources for the future toward carbon neutrality.

With this agreement, Mr. HOSONO Tetsuhiro, Chairman & CEO, JOGMEC, and Mr. Mohammed Y. Al Qahtani, Senior Vice President, Downstream, Saudi Aramco signed a Memorandum of Cooperation on October 8, 2022.

HyAxiom signed an agreement with Shell Plc and other parties to power a deep-sea liquefied natural gas carrier with a HyAxiom-developed solid oxide fuel cell to test the technology’s ability to cut carbon emissions from maritime transport, a sector which is vital to trade and economies worldwide but is considered hard-to-abate .

Korea Shipbuilding & Offshore Engineering (KSOE), the intermediate holding company of Hyundai Heavy Industries Group’s shipbuilding sector, said at The Westin Josun Seoul Hotel that it signed a consortium agreement to demonstrate fuel cells for ships with global energy company Shell, Doosan Fuel Cell, HyAxiom, and DNV.

Lebanese caretaker energy minister Walid Fayyad said that TotalEnergies will begin the process of exploring for gas in Lebanese waters as soon as a maritime border deal with Israel is concluded.

The French government said it stood ready to intervene to end a weeks-long oil refineries strike that has left a third of the country’s fuel stations running low and exacerbated a global shortage of distillates. The walkouts and unplanned maintenance at refineries in France run by oil majors TotalEnergies and ExxonMobilhave forced more than 60% of national refining capacity offline and blocked distribution from fuel depots.

Canadian Integrateds 

No significant news.

U.S. E&PS

No significant news.

EOG Resources filed an 8k discloses update on price matters and risk management.

CANADIAN E&PS

No significant news.

OILFIELD SERVICES

No significant news.

DRILLERS

No significant news.

REFINERS

Reuters reported that Valero Energy was restarting a hydrocracker on Monday at its 335,000 barrel-per-day (bpd) Port Arthur, Texas, oil refinery after a malfunction, said sources familiar with plant operations.

MLPS & PIPELINES

Genesis Energy, L.P. announced that, on October 10, 2022, the Board of Directors of its general partner declared a distribution on Genesis’ common units and 8.75% Class A Convertible Preferred Units attributable to the quarter ended September 30, 2022. These distributions will be paid on November 14, 2022 to holders of record at the close of business on October 31, 2022.

Deutsche Bank initiated coverage on International Seaways with a Buy rating.

Plains All American Pipeline, L.P. and Plains GP Holdings announced their quarterly distributions with respect to the third quarter of 2022. PAA announced a quarterly cash distribution of $0.2175 per common unit ($0.87 per unit on an annualized basis), which is unchanged from the distribution paid in August 2022. PAGP announced a corresponding quarterly cash distribution of $0.2175 per Class A share ($0.87 per Class A share on an annualized basis), which is unchanged from the distribution paid in August 2022.

With respect to PAA’s Series A Preferred Units, PAA announced a quarterly cash distribution of $0.525 per Series A Preferred Unit, or $2.10 on an annualized basis. Each of these distributions will be payable on November 14, 2022 to holders of record of each security at the close of business on October 31, 2022.

For its Series B Preferred Units, PAA announced a semi-annual distribution of $30.625 per Series B Preferred Unit, which will be payable on November 15, 2022 to holders of record at the close of business on November 1, 2022.

Deutsche Bank upgraded Scorpio Tankers to Hold from Sell.

Market commentary 

Wall Street futures fell, with technology shares leading the selloff, as worries over the impact of aggressive rate hikes, escalating Russia-Ukraine war and China ramping up COVID-19 measures darkened the economic outlook.

European shares were in the red, pressured by a rise in government bond yields globally and worries about a potential recession and the impact on corporate profits from a rapid rise in interest rates. UK stocks dropped, with investors focusing on fresh measures by the Bank of England to limit the rout in government bonds.

Japanese shares closed lower as heavyweight tech stocks fell and Hong Kong stocks tumbled after China vowed to stick to its zero-COVID policy. The U.S. dollar and gold prices were subdued. Oil slid more than 2% on recession and China COVID fears.


Nasdaq Advisory Services Energy Team is part of Nasdaq’s Advisory Services – the most experienced team in the industry. The team delivers unmatched shareholder analysis, a comprehensive view of trading and investor activity, and insights into how best to manage investor relations outreach efforts. For questions, please contact Tamar Essner.


This communication and the content found by following any link herein are being provided to you by Corporate Solutions, a business of Nasdaq, Inc. and certain of its subsidiaries (collectively, “Nasdaq”), for informational purposes only. Nasdaq makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Sources include Reuters, TR IBES, WSJ, The Financial Times and proprietary Nasdaq research.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

 

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