Thursday, August 30, 2012

SECTOR COMMENTARY

Energy stocks accelerated their losses in the final minutes of the session. E&Ps and oil services suffered the steepest declines despite little EPS impact from Isaac.

Refiners were the lone oil and gas sub-industry to experience gains on widening crack spreads and as gasoline rallied in California and Chicago due to refinery fires there. Meanwhile, Phillips 66 noted flooding at a refinery in Louisiana but otherwise Isaac now poses little threat to most Gulf region energy infrastructure after weakening to a tropical storm and moving inland. Companies said they could begin re-staffing and restarting shut-in offshore production platforms as early as Friday.

WTI crude oil fell $0.94 or 0.98% to $94.55 while Brent moved moderately higher as investors await Ben Bernanke’s speech at Jackson Hole tomorrow in search of clues about a third round of quantitative easing. Brent was supported as Norway's oil service workers may go on strike in September, which could disrupt supply from the world's eighth-largest exporter. Meanwhile, talks that consuming nations may release strategic oil reserves capped prices for both benchmarks.

Natural gas futures surged $0.063 or 2.35% to $2.748, extending gains for a second straight day as forecasts for warm weather that should boost air conditioning demand outweighed the bearish inventory report. The EIA showed a supply injection of 66 Bcf, which surpassed the 61 Bcf expected by analysts and also exceeded last year's gain and the five-year average increase for that week. On a bullish note, however, nearly 73 percent of offshore U.S. natural gas output in the Gulf of Mexico remains shut.

US INTEGRATEDS

Reuters - Chevron Corp said on Thursday it has begun to deploy personnel to its onshore and offshore facilities to assess the impact of Hurricane Isaac.

(Late Wednesday) Reuters - Chevron Corp said on Wednesday that all production at its four platforms was shut down and its Mississippi refinery was operating after Hurricane Isaac came ashore Tuesday evening.

(Late Wednesday) Reuters - Exxon Mobil Corp said on Wednesday that it was beginning assessments of offshore and onshore facilities in the wake of Tropical Storm Isaac.

INTERNATIONAL INTEGRATEDS

Reuters - BP Plc losing the chance to bid to maintain its major role in the United Arab Emirates oil sector may signal not just irritation with the British flagship company, but a more serious rift caused by frustration with UK policies and even broadcasts from London.

Reuters - Russian gas export monopoly Gazprom said on Thursday it has resumed gas supply via the Yamal-Europe pipeline, the main fuel trunk line for Poland, after almost two days of maintenance.

Reuters - Brazil's state-led oil company Petrobras said on Wednesday that its total output fell 1.2 percent in July to 2.55 million barrels of oil and natural gas equivalent per day (boepd), its second-lowest level 21 months, from 2.58 million boepd in June.

Reuters - Argentina's state-controlled energy company Repsol YPF said on Thursday it needed investments of $37.2 billion through 2017 and that it would fund nearly 90 percent itself, a company presentation showed.

Reuters - Royal Dutch Shell will be allowed to begin some "limited" drilling in Alaska's Chukchi Sea, the U.S. government said on Thursday, as the company struggled to keep its Arctic exploration plans this year alive.

Reuters - Valero Energy Corp said on Thursday its 180,000 barrel-per-day Memphis, Tennessee, refinery remained at reduced rates due to Royal Dutch Shell's Capline pipeline system shutdown.

Reuters - Royal Dutch Shell said flight inspections began over all of its storm-affected Gulf of Mexico assets on Thursday morning and that it could restaff operations on Friday depending on the weather.

(Late Wednesday) Reuters - Royal Dutch Shell said on Wednesday the company expects to begin restarting and restaffing its shut Gulf of Mexico operations on Friday after finishing damage assessments on Thursday after Tropical Storm Isaac.

Reuters - Norway's Statoil is to drill six wells in Russia's Arctic waters as part of the joint venture deal with Russia's Rosneft that was agreed on May 5, Statoil said on Thursday.

Reuters - Norway's Statoil is looking to pick up more shale acreage in the United States even though it nearly has all the assets it needs to meet its 2020 production plans, a top official said on Thursday. "We are all the time looking to pick up more acreage," Torstein Hole, senior vice president for U.S. onshore activities, said.

CANADIAN INTEGRATEDS

Barclays Capital upgraded Cenovus Energy Inc to an ‘Overweight’ rating from an ‘Equal Weight.’

U.S. E&PS

Reuters - Anadarko Petroleum Corp said the company would start restaffing its five shut Gulf of Mexico platforms on Friday in Tropical Storm Isaac's wake.

Reuters - Apache Corp on Thursday was waiting for bad weather to clear after Tropical Storm Isaac's landfall before flying crews to its shut Gulf of Mexico operations to assess any damage.

Goldman Sachs initiated coverage on Magnum Hunter Resources with a ‘Neutral’ rating as they view positively exposure to the Bakken/Eagle Ford/Marcellus shales that can drive low cost growth.

Reuters - Williams said on Thursday that inspections on its Transco natural gas pipeline will take several days to complete once they begin, following storm Isaac.

CANADIAN E&PS

Barclays Capital downgraded Nexen Inc to an ‘Equal Weight’ from an ‘Overweight’ rating.

Reuters - Canada's main opposition party, the New Democrats, have not yet decided whether the federal government should block a $15.1 billion bid by China's CNOOC Ltd to take over oil producer Nexen Inc, a party official said on Thursday.

(Late Wednesday) Reuters - Despite some dissent in Prime Minister Stephen Harper's cabinet, the odds look favorable for China's state-owned CNOOC Ltd's $15.1 billion bid to take over Nexen Inc as Ottawa starts a formal review of the deal.

REFINERS

Reuters - Cash CBOB gasoline in Chicago rose 14.00 cents a gallon and was bid at 41.00 cents over October RBOB gasoline futures on the New York Mercantile Exchange and offered at 43.00 cents over, on reports a crude unit was offline at Marathon Petroleum's 206,000 barrels-per-day refinery in Robinson, Illinois, traders said.

Reuters - Phillips 66's 120,200-barrel-per-day Rodeo, California, refinery was hit by a small fire in the coker unit on Wednesday, according to a notice filed with Contra Costa County pollution regulators.

Reuters - Phillips 66 said on Thursday "some flooding" was evident at its 247,000 barrel-per-day Alliance refinery in Belle Chasse, Louisiana, while it remained shut and without power after storm Isaac.

Reuters - Valero Energy Corp said on Thursday its 180,000 barrel-per-day Memphis, Tennessee, refinery remained at reduced rates due to Shell's Capline pipeline system shutdown.

MLPS

Reuters - Enbridge Inc’s U.S. operating unit Garden Banks Pipeline LLC late on Wednesday said its natural gas pipeline system remained under a force majeure outage following Hurricane Isaac's arrival on the Gulf Coast this week.

Press Release - Magellan Midstream Partners LP announced today that its board of directors has approved a two-for-one split of the partnership's limited partner units. Holders of record at the close of business on Sept. 28, 2012 will receive one additional limited partner unit for each unit owned on that date. The units will be distributed on Oct. 12, 2012.

Reuters - NuStar's oil terminal operations in the hub city of St. James sustained no operational damage in the aftermath of Hurricane Isaac and the company expects operations to fully return by Saturday, the company said on Thursday.

Bank of America Merrill Lynch downgraded Oiltanking Partners LP to a ‘Neutral’ rating from a ‘Buy.’

Reuters - Targa Resources said its Stingray natural gas processing plant in Louisiana will likely be the first of three shut plants to return to service, after declaring a force majeure on its Venice system early this week due to tropical storm Isaac.

MARKET COMMENTARY

Stocks fell after several days of muted trading as investors took a defensive posture before Federal Reserve Chairman Ben Bernanke's much-awaited speech on Friday.

U.S. consumer spending got off to a fairly firm start in the third quarter, rising by the most in five months and offering hope economic growth would pick up this quarter.

Nearly all U.S. retailers posted better-than-expected sales gains in August at stores open at least a year as parents and students wrapped up back-to-school purchases, setting the stage for a strong third quarter.

A successful Italian bond auction pointed to confidence among investors that the European Central Bank will keep its word and take measures dramatic enough to get a grip on the euro zone's debt crisis.