TUESDAY, SEPTEMBER 18, 2012

SECTOR COMMENTARY

Energy stocks witnessed the steepest losses today among the broader markets, led lower by independent refiners and natural gas levered E&P’s, after Henry Hub futures fell more than 3% on the day with Quicksilver Resources dropping 8% on the day. Investors will be looking ahead to some key economic reports throughout the week for further direction.

U.S. crude oil settled at $95.29, down $1.33 or 1.38%, and Brent fell below $112 a barrel extending the previous session's slide, as investors shifted focus from the likely economic benefit of central bank stimulus to concerns about sputtering global economic growth that prompted the U.S. Federal Reserve to launch its bond-buying program. Also pressuring oil, a senior Gulf source said Saudi Arabia is working to lower oil prices and is producing around 10 million barrels per day and that a majority of OPEC members want oil prices around $100 per barrel and would be increasing production over the next few months. U.S. crude oil stockpiles likely rose last week after two straight weeks of drawdowns as companies continued to restore operations in the U.S. Gulf Coast regions and imports rebounded after the passage of Hurricane Isaac, an expanded Reuters poll of analysts showed on Tuesday. Crude inventories were forecast to have risen 1 million barrels in the week ended Sept. 14, with six analysts seeing a build in stockpiles, and three others expecting a draw. Domestic stocks of crude climbed 2 million barrels to 359.1 million barrels in the week ended Sept. 7, the EIA reported last week.

Natural gas futures fell $0.092, or 3.21% to $2.773 for a fourth straight session, with the front-month contract leading the slide as forecasts for mild U.S. weather for the next two weeks dimmed prospects for demand. Traders said fading summer heat and record- or near-record-high storage and production should keep pressuring gas prices, at least until cooler temperatures stir up some heating demand. The nearby contract has slid more than 9 percent in four sessions, after hitting a five-week high of $3.07 last week.

U.S. INTEGRATEDS

(Late Monday) Reuters - Brazil's petroleum regulator ANP appealed an injunction on Monday banning Transocean Ltd and Chevron Corp from operating in Brazil on the grounds the ban would harm oil exploration in the country, ANP chief Magda Chambriard said.

Reuters - Exxon Mobil Corp said Tuesday it resumed normal operations at its offshore facilities in the Gulf of Mexico (GoM) and its joint-venture refinery in Chalmette, Louisiana, which were shut due to Hurricane Isaac.

INTERNATIONAL INTEGRATEDS

Reuters - The Shah Deniz offshore gas field led by BP could end up pumping significantly more gas than currently planned when a second stage of the project comes online in 2017, Azerbaijan's energy minister said on Tuesday.

Reuters - BP shut a small Norwegian oil field last week after a potentially dangerous leak, the Petroleum Safety Authority of Norway and BP said in separate statements on Tuesday.

Reuters - Sovereign funds of Singapore, Qatar and Abu Dhabi are interested in buying part of the shares Eni will sell in gas transport group Snam, a source close to the matter said on Tuesday.

Reuters - Royal Dutch Shell's Majnoon oilfield may miss a 2012 target of 175,000 barrels per day, an executive said on Tuesday, hampered by pipeline construction delays.

Reuters - Royal Dutch Shell expects to resume production at its Majnoon oilfield in Iraq in the first quarter of 2013, Arne de Kock, Shell's commercial general manager for Iraq, told Reuters on Tuesday on the sidelines of an energy conference.

CANADIAN INTEGRATEDS

(Late Monday) Press Release - Gibson Energy Inc. announced today two expansion opportunities at its Hardisty Terminal near Hardisty, Alberta. Subsequent to the previously announced open season process, the Company has received sufficient, long-term, committed customer support to begin construction of two 400,000 bbl oil storage tanks for an aggregate addition of 800,000 bbls of storage.

(Late Monday) Press Release - Suncor Energy Inc announced the renewal of its normal course issuer bid for the purchase and cancellation of up to $1 billion worth of its common shares between the dates of September 20, 2012 and ending September 19, 2013.

CANADIAN E&PS

Macquarie downgraded Penn West from ‘Neutral’ to ‘Underperform’ based on valuations.

OIL SERVICES

(Late Monday) William Blair initiated coverage of C&J Energy Services, Core Laboratories, FMC Technologies, Forum Energy Technologies, National Oilwell Varco and Oil States International with ‘Outperform’ ratings.

(Late Monday) William Blair initiated coverage of Schlumberger with a ‘Market Perform’ rating.

DRILLERS

(Late Monday) Reuters - Brazil's petroleum regulator ANP appealed an injunction on Monday banning Transocean Ltd and Chevron Corp from operating in Brazil on the grounds the ban would harm oil exploration in the country, ANP chief Magda Chambriard said.

REFINERS

(Late Monday) Reuters - Alon USA Energy reported over pressuring in a gasoline-making fluid catalytic cracking unit (FCCU) that lead to emissions on Sunday at its 67,000 barrel-per-day (bpd) Big Spring, Texas, refinery, according to a filing with state pollution regulators on Monday.

Credit Suisse downgraded shares of Marathon Petroleum, Phillips 66, Delek US Holdings and Western Energy to ‘Neutral’ from ‘Overweight’, recommending that investors “take profits across the group after a strong run in 2012, even though the group offers some value.” The bank is “specifically concerned that returning Atlantic Basin capacity will lower Gulf Margins in 2013 and that rail capacity will lower Mid-Con crude spreads.”

MLPS

Morgan Stanley upgraded Access Midstream Partners LP to ‘Overweight’ from Equal-Weight’.

(Press Release) Reuters - U.S. midstream company Buckeye Partners LP said on Monday it was asking shippers to review their current nominations on pipeline segments L010 and L316 and revise them with binding nominations.

Press Release - El Paso Pipeline Partners, L.P. today announced that the underwriters of its recently completed public offering of 7,100,000 common units have exercised in full their option to purchase an additional 1,065,000 common units. Wells Fargo Securities, Barclays, Citigroup, Credit Suisse, J.P. Morgan and UBS Investment Bank acted as joint book-running managers, and Deutsche Bank Securities and RBC Capital Markets acted as co-managers for the offering. The public offering price for the additional common units is $34.34 per unit, the same price at which the 7,100,000 common units were sold.

(Late Monday) Press Release – ONEOK today announced that it has completed its $150 million accelerated share repurchase agreement with Goldman, Sachs & Co. that was announced June 12, 2012.

MARKET COMMENTARY

Stocks ended flat after bellwether FedEx cut its profit forecast and investors pulled back after last week's rally on the central bank's latest stimulus plan.

TOP NEWS

The Federal Reserve will not waver from its aggressive policy stance when one of its two bond-buying programs expires at year end, and it is prepared to do even more to get Americans back to work, two Fed officials said.