DJ Energy & Utilities Roundup: Market Talk

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.

1548 ET - Mexican state oil company Pemex says it has fully restored production at 125 wells in the Ku-Maloob-Zaap oilfields, in the southern Gulf of Mexico, which were shut down after an explosion and fire at an offshore platform earlier this month. The affected wells produce a total of 421K b/d of oil. Pemex estimated lost output as a result of the accident at 1.6M barrels of crude oil. Seven workers were killed in the explosion and six others injured. (anthony.harrup@wsj.com)

1454 ET - Natural gas prices retreat from Friday's nearly three-year-high, finishing today's session 1.9% lower at $4.305/mmBtu as Hurricane Ida causes electricity outages and brings cooler temperatures, both of which can bearishly reduce demand for the commodity. The storm supported strong prices last week as it cut offshore natural gas production by nearly 100% as workers evacuated for safety reasons and equipment was temporarily turned off. But investors expect that lost supply to be reversed, while the lost demand from power outages and cooler weather will be more difficult to recoup. (dan.molinski@wsj.com)

1347 ET - Electricity problems may be starting to improve in hurricane-battered Louisiana as a website that tracks power outages reports a slight reduction in customer outages after more than 24 hours of straight-up increases. The website, poweroutage.us, says Louisiana customer outages have fallen early afternoon to 1.033M customers out of 2.177M total customers, down from a late-morning high of 1.045M. Mississippi's power outages, which were far less than Louisiana's, have also improved. WTI oil prices are trading 0.7% higher at $69.19 a barrel, while natural-gas prices that fell sharply this morning on worries over reduced demand due to power outages, have pared those declines to trade 1.3% lower at $4.330/mmBtu. (dan.molinski@wsj.com)

1327 ET - Exxon Mobil is determining if Hurricane Ida, which made landfall in Louisiana yesterday, affected any of its offshore and onshore facilities, spokeswoman Sarah Nordin says. The oil company's Baytown and Beaumont facilities are operating normally and its Baton Rouge refinery didn't sustain any significant damage during the storm, she says. But the Baton Rouge facility is shutting down units to stabilize operations, Nordin says. "Once we confirm we have access to needed feedstocks and third-party utilities to stabilize our systems, we will begin the process of returning to normal operations," she says. The company says it's also transporting refined products from unaffected regions to customers in the most severely affected areas. (mark.maurer@wsj.com; @markgmaurer)

0832 ET - Natural gas prices fall 2.2% to $4.290/mmBtu in a buy-the-rumor-sell-the-news trade over Hurricane Ida. Fears of curtailed production due to Ida helped send natural gas prices 13.5% higher last week, the biggest weekly gain in a year. But while offshore gas production has been cut by 94%, that will all be mostly reversed in the coming days and weeks as producers still need to meet output quotas and delivery obligations. Also, the storm will bring cooler weather to the East later this week, reducing gas demand. Finally, the storm has also caused Louisiana power outages that reduce the amount of gas used by power plants to generate electricity. (dan.molinski@wsj.com)

0809 ET - Oil investors are focused on Louisiana refineries in the wake of Hurricane Ida as they try to gauge whether shutdowns could last as long as they did after Hurricane Harvey in 2017. "Our refining coverage has been the primary focus of investor conversations around Hurricane Ida," say analysts at Goldman Sachs. "According to EnergyNewsToday, 1.0 mn bpd of Louisiana capacity was down as of Sunday night as a precaution (6% of US footprint), including Valero St. Charles (215 kbpd, shut), Valero Mereaux (135 kbpd, shut), Phillips 66 Alliance (250 kbpd, shut) and Shell Norco (250 kbpd, shut). Additionally, the Exxon Baton Rouge (500 kbpd) refinery shut down some equipment." (dan.molinski@wsj.com)

0758 ET - WTI oil prices slip 0.2% to $68.62 a barrel as oil investors try to gauge Hurricane Ida's overall supply-and-demand impact. Offshore oil production has been almost completely halted for safety reasons, but unless equipment sustained damage that lost production should be recouped over the coming days. "Crude oil prices have pulled back from Friday's hurricane rally, but are likely to stay firm and could resume climbing," says Spartan Capital's Peter Cardillo. Some refineries are also shut, and portions of the vital Colonial pipeline that transports fuel from Texas refineries to the South and the East Coast are also down, factors that are pushing RBOB gasoline 1.5% higher to $2.1513 a gallon. (dan.molinski@wsj.com)

0748 ET - Liquefied natural gas producers could tap into carbon capture and storage to accelerate their decarbonization plans, says Daniel Toleman, a senior analyst at consulting group Wood Mackenzie. Mr. Toleman says LNG players have several ways to slash their emissions, including carbon capture, carbon offsets, methane leakage reduction, electrification, and the use of renewable energy and batteries. "Carbon capture and storage can have a material impact on reducing emissions of LNG projects," he says, adding that depending on the CCS strategy adopted, "more than 25% of carbon emissions can be removed". (maitane.sardon@wsj.com)

0448 ET - PetroChina's strong upstream oil-and-gas activity could be a positive catalyst for its shares, Morningstar says. It notes that 1H operating profit for the oil major's exploration and production segment tripled to CNY30.9 billion, as average realized oil prices for both spot and long-term cargoes rose 52% to $59.45 a barrel. Morningstar also cites that 1H realized natural gas prices rose 23% to CNY1,441 per thousand cubic meters. These factors, together with low procurement costs, could mean further upside for PetroChina's H-shares, Morningstar says. Morningstar keeps its fair-value estimate for PetroChina at HK$3.86. Shares are 4.1% higher at HK$3.30. (yongchang.chin@wsj.com)

0410 ET - PetroChina's refining and chemicals unit is likely a growth driver, Morningstar says, pointing to the division's 1H operating profit of CNY22.2 billion, compared with loss of CNY10.5 billion a year ago. This is due to rising prices and sales volumes of refined oil products on the back of China's economic recovery. The equity research company thinks PetroChina's refining and chemicals unit is among its most profitable due to growing demand, and expects the company to double down on the unit to ensure continued profitability. Morningstar has a fair value estimate of HK$3.86 on PetroChina's H-shares, which are up 4.4% at HK$3.31. (yongchang.chin@wsj.com)

(END) Dow Jones Newswires

August 30, 2021 16:50 ET (20:50 GMT)

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