Welcome to the MarketReader Energy Minute.

Below are AI-generated insights on moves in the energy sector, powered by MarketReader technology.

Thursday, August 1

XLE [-1.4%]
The Energy Select Sector SPDR Fund (XLE) has seen a decline of 1.3% during market hours on Thursday. Key contributors to this movement include Chevron, Exxon Mobil, Hess, ConocoPhillips, and Valero, all of which reported negative returns. Chevron's acquisition of Hess faces uncertainty due to arbitration claims from Exxon Mobil and CNOOC regarding a Guyana oil venture. Crude oil prices have also dropped significantly, reflecting broader market sentiment and potentially impacting energy sector valuations. In macroeconomic news, U.S. crude inventories experienced a larger-than-expected drawdown, while geopolitical tensions in the Middle East have led to a surge in crude prices. Additionally, the ISM Manufacturing PMI fell below expectations, indicating contraction in U.S. factory activity, further influencing market dynamics.

USO [-1.1%]
The United States Oil Fund LP experienced a decline, with a change of nearly 1.0% since the previous close, amid escalating geopolitical tensions in the Middle East. Iran's Supreme Leader ordered a direct strike on Israel following the assassination of a Hamas leader, leading to fluctuations in oil prices. Despite a recent surge in WTI crude prices, these developments contributed to the fund's downward movement. In addition, significant options trading activity was noted, with over 300,000 Brent Crude Oil Call Options traded in a single day, marking the highest volume since April. U.S. crude oil futures rose above $78 per barrel, reflecting concerns over supply disruptions and strong fuel demand, as U.S. crude inventories saw a larger-than-expected decline of 3.4 million barrels last week.

BOIL [+4.5%]
Natural gas prices have increased notably since Wednesday, coinciding with a significant rise in crude oil prices. This surge is attributed to escalating geopolitical tensions in the Middle East, particularly Iran's declaration of retaliation against Israel following recent airstrikes. Additionally, a larger-than-expected decline in U.S. crude inventories reported by the EIA has supported rising commodity prices. These developments occur amidst strong fuel demand, despite broader economic concerns stemming from China that influence price movements across energy sectors.

CVX | $155.86 | -2.9% | -8.3B

XOM | $117.79 | -0.7% | -3.7B

HES | $143.70 | -6.3% | -2.8B

TS | -9.5% | -3.1B
Tenaris S.A. shares are trading significantly lower following the release of its Q2 earnings report, which showed an adjusted EPS of 0.29, falling short of the consensus estimate by 0.68. Quarterly sales reached 3.32 billion, meeting analyst expectations but representing a notable decline from 4.08 billion in the same quarter last year. The company highlighted several challenges, including high OCTG imports into the U.S., ongoing industry consolidation, and political volatility affecting drilling activities in Mexico and Argentina. Furthermore, Tenaris anticipates a decrease in sales and EBITDA due to reduced activity in the U.S. and Latin America, alongside a prolonged decline in OCTG prices across the Americas. Maintenance stoppages at several mills are also expected.

HES | -6.3% | -2.8B
The arbitration merits hearing regarding the applicability of the Stabroek right of first refusal to the upcoming merger between Hess Corp and Chevron has been scheduled for May 2025. Both companies had sought an earlier hearing, but scheduling conflicts caused delays. Concurrently, Exxon Mobil and CNOOC have filed arbitration claims asserting their right of first refusal over Hess's stake in a Guyana oil-producing joint venture, which could complicate Chevron's $53 billion acquisition of Hess. The arbitration panel is expected to decide on these claims in the second half of 2025, adding to the uncertainty surrounding the merger and ongoing legal challenges. Hess Corp is currently underperforming relative to its sector peers, potentially leading the sector's weakness.

TRMLF | -5.3% | -771.2M
Tourmaline Oil Corp (Alberta) has seen its stock price drop significantly, moving down by 5.4% since Wednesday. This decline coincides with the release of the United States ISM Manufacturing PMI for July 2024, which reported a figure of 46.8, falling short of the expected 48.8. This represents a notable contraction in US factory activity, with new orders and production levels decreasing. The PMI data reflects a persistent negative trend, marking the 20th decline in the last 21 periods. Furthermore, Tourmaline Oil Corp is currently underperforming relative to its sector peers, potentially leading the sector's overall weakness.

CVE | -4.3% | -1.5B
Cenovus Energy reported second-quarter earnings of $0.53 per share, missing the consensus estimate by a notable margin. This figure marks an increase from the previous year's $0.44, yet contrasts with a robust sales performance of $14.90 billion, which exceeded expectations. The company's net earnings rose to $1 billion, up from $866 million, but fell short of the normalized EPS estimate. Cenovus plans to return 100% of excess free funds flow to shareholders starting in the third quarter after achieving a net debt target of $4 billion. Concurrently, total upstream production remained stable at 800,800 barrels of oil equivalent per day. The stock's decline of 4.3% is also correlated with Hess Corp's significant drop amid complications regarding its merger with Chevron, suggesting a shared vulnerability in market sentiment affecting both companies.

CCJ | -7.1% | -1.3B
Cameco Corp is currently underperforming compared to its sector peers, with its stock price dropping significantly since Wednesday. Scotiabank analyst Orest Wowkodaw has revised the company's price target from Cdn$85.00 to Cdn$81.00, while maintaining a Sector Outperform rating. This adjustment may reflect updated expectations regarding Cameco's performance or market conditions. Additionally, Cameco reported a decrease in production at its Inkai operations in Kazakhstan for the quarter and the first half of 2024, attributed to challenges with sulfuric acid availability. The production target at Inkai for 2024 is set at 8.3 million lbs.

HAL | -3.1% | -909.7M
Halliburton Co (HAL) has experienced a notable decline, moving lower alongside the broader energy sector, which has also dropped significantly. The Energy Select Sector SPDR Fund (XLE) is down, reflecting a negative sentiment across the industry. Additionally, the recent release of the United States ISM Manufacturing PMI for July 2024 showed a contraction in factory activity, coming in below expectations. This marks the 20th decline in the last 21 periods, suggesting ongoing challenges in the manufacturing sector that could contribute to volatility for companies like Halliburton.

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