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DJ Global Energy Roundup: Market Talk

· 02/04/2021 14:41

The latest Market Talks covering Energy markets. Published exclusively on Dow Jones Newswires throughout the day.

1440 ET - US benchmark oil prices end a choppy session 1% higher at a fresh, 1-year-high of $56.23 a barrel amid tightening global supplies and expectations for a strong recovery in demand by the spring. WTI crude's increase marks four straight sessions of gains and sets it on course for one of its biggest weekly gains in months. Bob Yawger at Mizuho says declining US oil inventories, including a big drop in stockpiles at the US storage hub in Cushing, Okla., are providing fundamental support for price. He says further lift is coming from hopes for an economy-boosting US stimulus package, and rising overall risk appetite as US stock markets rise. (dan.molinski@wsj.com)

1303 ET - Fred. Olsen Cruise Lines, a UK-based cruise operator, says it has scrapped all sailings until the end of June due to Covid-19 restrictions in England, affecting 14 sailings that had been due to restart beginning May 22. The sailing hiatus extension demonstrates the challenge cruise lines are facing in restarting voyages as they near a year of idle operations, even outside the US. "We are constantly reviewing our back in service dates in line with the latest government guidance, and working closely with CLIA and other industry bodies towards a return to sailing," says Managing Director Peter Deer. (dave.sebastian@wsj.com; @depsebastian)

1256 ET - The many SPACs coming to the market to hunt for clean-energy companies can help private-equity firms exit investments in the sector, says Mark McCall, a managing director at Lime Rock New Energy. The private-equity manager, which so far has raised more than $100M for its first clean-energy fund, backs companies such as Qmerit, an installer of electric vehicle-charging stations for car makers, fleet operators and property owners. "We're targeting smaller companies but also rapidly growing companies," McCall says. "Public-market investors are looking for growth. So, we may invest in companies that ultimately become targets for SPACs." (luis.garcia@wsj.com; @lhvgarcia)

1247 ET - Tapestry expects the spring delivery for its Kate Spade brand to be affected because of a cargo-ship incident last month. An A.P. Moller-Maersk A/S/ cargo ship lost several hundred containers in the Pacific Ocean while sailing though heavy seas from China to Los Angeles, the latest in a spate of incidents in which boxes carrying millions of dollars' worth of goods have gone overboard. The company expects sales to increase at a low double-digit rate in 3Q. "We are planning realistically as we continue to monitor the external environment in light of the recent resurgence of cases across the globe and the noted supply chain and logistics challenges impacting receipts," interim CFO Andrea Resnick says. Shares are up 4%. (dave.sebastian@wsj.com; @depsebastian)

1240 ET - Sara Nelson, the influential leader of the Association of Flight Attendants, cautions that requiring Covid-19 testing before all domestic flights would plunge some airlines into bankruptcy. "It would be devastating," she says, warning of more job losses than airlines are already planning. Lawmakers in both parties have questioned the wisdom of mandating testing prior to domestic flights during a committee hearing Thursday, arguing that it could divert testing supplies from more important uses and wouldn't address people traveling by train and bus. (alison.sider@wsj.com; @alyrose)

1225 ET - European stocks close mostly higher on optimism about a US economic-stimulus package and a vaccination-driven economic recovery. The Stoxx Europe 600 gains 0.6% and the DAX and CAC-40 rise 0.9% and 0.8% respectively. Still, the FTSE 100 edges 0.06% lower as sterling rises after traders interpreted Bank of England comments as implying U.K. interest rates are unlikely to turn negative in the short term. The price of a barrel of Brent crude increases 0.2% to $58.60. The Dow Jones advances 0.8%. "Continental equity benchmarks are higher as optimism that the Biden administration will sign off on a stimulus package has helped the mood," says David Madden at CMC Markets. (philip.waller@wsj.com)

1218 ET - Cummins says its supply chains are being stretched from a combination of Covid-related inefficiencies and surging demand for its diesel engines that started in the second half of last year. "We've never seen an increase in demand that happened as quickly," says Chief Operating Officer Tony Satterthwaite. The company reports it had higher freight costs in 4Q that it expects will continue through the first half of this year. Cummins also is facing longer delivery times and reduced volumes of parts from suppliers whose output has been hampered by high employee absenteeism related to Covid-19. (robert.tita@wsj.com; @bob_tita)

1213 ET - Singapore Airlines says in its quarterly results that 90% of its flight crews have signed up to receive Covid-19 vaccines, as the industry wrestles with whether to make it mandatory for customer-facing staff. United Airlines CEO Scott Kirby, a partner of SIA in the Star Alliance, favors requiring workers to do so, and this week punted the idea of a coalition of like-minded companies to lead the push. Airline trade group IATA, on the other hand, doesn't favor mandatory vaccination for staff or passengers. (doug.cameron@wsj.com; @dougcameron)

1126 ET - Oaktree Capital Management, the largest shareholder of Infrastructure & Energy Alternatives, sheds a large chunk of its roughly 50% stake in the builder of infrastructure for the renewable-energy sector. A secondary offering of 8M shares held by an affiliate of funds managed by Oaktree is priced at $16.75 apiece, a steep discount to Wednesday's closing price of $21.86, for $134M proceeds. Oaktree, which owned roughly 12.7M shares before the offering, also grants an 853,283-share overallotment option. Oaktree formed IEA in 2011 in connection with its acquisition of White Construction and took it public in 2018 in a merger with blank-check company M III Acquisition. IEA down 14% to $18.75. (colin.kellaher@wsj.com)

1051 ET - NetJets, the private-jet company owned by billionaire Warren Buffett's Berkshire Hathaway, says it's made a significant investment in WasteFuel, which is developing a biorefinery in the Philippines with plans to convert 1M tons of municipal waste into 30M gallons of sustainable aviation fuel. NetJets says it's the first private aviation company to buy a stake in the production of sustainable aviation fuel, adding that it will buy at least 100M gallons of the Manila refinery's product over the next 10 years. Another billionaire, Enrique Razon of the Philippines, is backing the WasteFuel project through his Prime Infra infrastructure arm. (colin.kellaher@wsj.com)

1042 ET - US benchmark oil prices erase overnight gains to fall 0.5% to $55.40 a barrel as investors worry a 17% rally in prices over the past 30 days amid tightening supplies will lead major producers to start raising production. Prices closed Wednesday at their highest in more than a year after the EIA reported US crude-oil inventories fell to an 11-month-low 476M barrels. But those declines could reverse if US crude production, which has stayed relatively low near 11M barrels a day for 12 straight weeks, begins to climb. And a 10-week streak of increases in the Baker Hughes US oil rig-count might suggest production increases are coming. (dan.molinski@wsj.com)

1041 ET - Natural gas prices rise 1% to $2.813/mmBtu after the EIA reports a larger-than-normal weekly decline in gas inventories amid cold weather in the Northeast that boosted heating demand. The government agency says stockpiles fell by 192B cubic feet last week, which is near to forecasts in a WSJ survey for a 194-bcf decline, and much larger than the five-year-average withdrawal of 146 bcf. The decline leaves total inventories at 2.689T cubic feet, which is still a bearish 8% above the average for this time of year, although analysts say continued cold weather in February likely will narrow that surplus by a couple percentage points over the coming weeks. (dan.molinski@wsj.com)

(END) Dow Jones Newswires

February 04, 2021 14:41 ET (19:41 GMT)

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