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Energy & Utilities Roundup: Market Talk

3 Feb 2018 9:20 am

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.

2125 GMT - Net bets on a higher oil price hovered near all time highs in the week ended Tuesday, according to data from the CFTC. Bullish speculative positions outnumbered bearish positions by 495,975 contracts, slightly below the record high from one week ago at 496,111, in data going back to 2006. Investors and analysts have become more optimistic on the outlook for oil prices this year amid a steadily tightening global market. Oil prices traded near three-year highs this week, and settled down 0.5% to $65.45 a barrel Friday.

2042 GMT - The Canadian dollar's recent rally hit the skids Friday as most major currencies lost ground against the greenback amid a day of turmoil on financial markets. The USD was recently at C$1.2427 from C$1.2267 late Thursday, according to CQG. The Canadian dollar was hit throughout the day as investors grew concerned about rising interest rates and pounded financial markets. Crude prices also dipped Friday, falling by about 1% to $65.14 a barrel on the New York Mercantile Exchange. The loonie slid even further on Friday afternoon following comments from Prime Minister Trudeau at a town hall that Canada would walk away from Nafta if Canadian officials didn't like terms of the trade deal offered by the US. (david.george-cosh@wsj.com; @itsdgc)

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2024 GMT - Canada PM Justin Trudeau faced a raucous crowd at a townhall event on Vancouver Island, about 50 miles west across the Strait of Georgia from Vancouver, about federal government approval of Kinder Morgan's planned expansion of Trans Mountain pipeline system. He approved project in late 2016, but now left-leaning provincial government looking to thwart expansion through environmental legislation. "We will be moving forward with the Kinder Morgan pipeline," Trudeau told townhall, adding his government has implement measures to protect British Columbia's coastline -- including rejecting Enbridge's proposed Northern Gateway corridor. His townhall event was disrupted myriad times by anti-pipeline protestors, and police at event removed people on at least two occasions.(paul.vieira@wsj.com; @paulvieira)

2011 GMT - The Dow suffers its biggest daily point loss since the 2008 financial crisis, as inflation worries rattle investors following a report that showed the strongest pace of wage growth since the recession. Exxon Mobil and Chevron led the selling as the oil majors' 4Q profits missed expectations. Volatility returns to the markets as the blue chips average had two declines of at least 1% this week, compared with 10 in all of 2017 and the DJIA and S&P 500 had their biggest weekly declines since January 2016. Inflation fears helped push the 10-year Treasury yield to 2.85%, the highest in more than four years. DJIA tumbles 665 points to 25520, the S&P falls 59 to 2762 and the Nasdaq drops 144 to 7240. (patrick.sheridan@wsj.com)

1959 GMT - Shares of US energy companies take a hit as investors send major indexes toward their worst day in years. The S&P 500 energy sector, which had rebounded in January following a rally in crude prices, was off 4.5%, close to wiping out all of its year-to-date gains. Dragging on the sector: Chevron and Exxon, whose shares fell sharply after reporting quarterly profits that missed analysts' expectations. (akane.otani@wsj.com

1609 GMT - Massachusetts officials may have given Eversource's Northern Pass transmission project a thumbs up recently, but New Hampshire officials this week gave it a thumbs down. Eversource first proposed project, a nearly 200-mile line to bring hydropower into New England via New Hampshire, several years ago. It received presidential approval in November and last week Massachusetts officials selected Northern Pass from among 40 others to fulfill a call for clean energy. Northern Pass also needed approval in New Hampshire, but the state's site evaluation committee instead denied the project's application, saying it couldn't be sure Northern Pass wouldn't unduly interfere with the orderly development of the region. In a statement, Eversource said it was "shocked and outraged" and would appeal the decision. (erin.ailworth@wsj.com; @ailworth)

1621 GMT - Strong results from Royal Dutch Shell PLC and ConocoPhillips will raise expectations for BP fourth-quarter and full-year results on Tuesday Feb. 6. Still, analysts will seek further reassurance on the dividend in terms of capital investment, where BP has targeted an annual range of $15-17 billion out to 2021; disposals, where the plan was to raise $4.5 billion of cash raised in 2017; and net debt, which reached $40 billion in Q3 to leave gearing at the top of the company's target range, says broker A.J. Bell. BP is also likely to face scrutiny over the $1.7 billion extra charge relating to the 2010 Deepwater Horizon accident, to be booked in Q4, and a $1.5 billion one-off tax charge relating to U.S. tax changes, even if in the long run BP will pay less in the US. Shares down 2.4%. (philip.waller@wsj.com)

1509 GMT - Ophir Energy's Fortuna floating liquefied natural gas project in Equatorial Guinea appears to have been heavily discounted by investors despite potential progress in 2018, Investec says. The brokerage says a 25% drop in Ophir shares in recent weeks suggests that the market has turned pessimistic on the prospect of a final investment decision in the first half of 2018. However, Investec says its analysis suggests that Ophir's plan stands up on an economic basis and that the company has sufficient funding until possible first gas in 2021/2022. Investec raises its rating on Ophir stock to buy from hold, maintaining a target price of 75 pence. (adam.clark@dowjones.com)

1407 GMT - Total factory orders rose 6% in 2017 from 2016, the best percentage increase for a full year since 2011, when the US was just emerging from a deep recession, Commerce Department data shows. In 2011, orders rose by 12.6%. Orders fell by 1.9% in 2016 and by 7.7% in 2015. Those declines reflected a fall off from a 2014 peak supported by a resurgent domestic energy industry. Total orders in 2017, $5.697T, were below 2014's level of $5.931T, the highest level since 1992. (eric.morath@wsj.com; @ericmorath)

1402 GMT - Singapore arrests several former key executives of rig builder Keppel in connection with a scandal involving $55M in bribes to officials at Brazilian oil giant Petrobras between 2011 and 2014 to win 13 rig contracts. People involved say Tay Kim Hock, the former CEO of Keppel Fels Brazil, a wholly owned unit, was among those arrested and is now out on bail. Keppel has agreed to pay $422M in fines to settle corruption charges in Brazil, Singapore and the US that stretched over a decade. (costas.paris@wsj.com)

1418 GMT - Higher oil prices will boost IGas Energy's cash generation this year, Investec forecasts. The investment bank says the onshore oil-and-gas company ended 2017 with a stable cash balance of GBP15 million, down GBP1 million compared with mid-year. Meanwhile, IGas production last year was in line with expectations and expenditures came in lower than estimated, Investec says. IGas also expects to deliver gas monetization at its Albury gas field in the U.K. Investec notes that 2018 is set to be a busy year for U.K. shale. (adria.calatayudvaello@dowjones.com)

1103 GMT - Even after Fortum released what ING sees as "strong" 2017 results, its bonds offer little value compared to those of better-rated Vattenfall and Orsted. The Finnish energy group's bonds trade around 10 basis points wider than Orsted in z-spread terms and 15 bps wider than Vattenfall, analyst Nadege Tillier says. The latest rally in Fortum bonds, which has brought asset swap spreads on the 2.25% 2022 issue to 30.44 bps from around 45 bps, could be attributed to expectations that the company won't be downgraded further to BBB-. (tasos.vossos@wsj.com; @tasosvos)

(END) Dow Jones Newswires

February 03, 2018 04:20 ET (09:20 GMT)

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