Welcome to the MarketReader Energy Minute.

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

Friday, August 2

XLE [-1.0%]
The Energy Select Sector SPDR Fund (XLE) has declined by 1.0% during market hours on Friday. Key contributors to this performance include Chevron Corporation, which reported lower-than-expected earnings and plans to relocate its headquarters, and Schlumberger, whose joint venture secured a significant contract in Brazil. Other notable declines came from Valero Energy Corp, which faces operational impacts due to a maintenance shutdown at its Texas refinery, alongside a new aviation fuel contract. Additionally, the U.S. Nonfarm Payrolls report revealed disappointing job growth and an increase in the unemployment rate, raising concerns about economic cooling. This labor market data coincides with a significant drop in WTI oil prices, further influencing energy sector valuations.

USO [-3.7%]
The United States Oil Fund LP (USO) has seen a decline of 3.3% amid several economic indicators. The U.S. unemployment rate rose to 4.3%, up from 4.1%, raising concerns about economic growth. Non-Farm Payrolls data for July revealed a disappointing increase of 114,000 jobs, falling short of the anticipated 175,000. Average Hourly Earnings year-over-year also came in lower than expected at 3.6%. Compounding these issues, weakening demand from major importers such as China and India, along with a slight rise in OPEC production, has exerted additional downward pressure on oil prices. Furthermore, Brent Spot Oil prices have experienced a significant decline, reflecting broader concerns regarding oil demand amid weak economic data, including disappointing ISM Manufacturing PMI figures and rising jobless claims.

BOIL [+2.7%]
U.S. natural gas prices have reached multi-decade lows, resulting in record-high consumption for power generation. Natural gas now accounts for approximately 42% of total power generation in the U.S. this year. Concurrently, concerns regarding an economic slowdown, driven by weak manufacturing data from both the U.S. and China, are fostering bearish sentiment across energy markets. This is reflected in the negative performance of XNG/USD, which has seen a daily return decline. In the pre-market session, ProShares Ultra Bloomberg Natural Gas (BOIL) has experienced a price increase of 2.9% since Thursday.

UGA [-2.9%]
United States Gasoline Fund LP (UGA) has experienced a price decline of 2.3% since Thursday. This movement coincides with a notable drop in West Texas Intermediate (WTI) oil prices, which have decreased significantly. The historical correlation between UGA and oil prices suggests that the decline in oil may be influencing UGA's performance. This broader market sentiment appears to be affecting the energy sector as a whole.

XOM | $118.44 | +1.3% | +7.0B

CVX | $150.60 | -1.3% | -3.6B

CNQ | $34.02 | -2.6% | -1.9B

OXY | -3.3% | -1.7B
Occidental Petroleum Corp (OXY) has seen a notable decline in its stock price, aligning with a significant drop in oil prices. The company has terminated its exchange offer for CrownRock Notes, which involved up to $376 million in new senior notes, resulting in the return of tendered notes to holders without any consideration. An 8-K filing with the U.S. Securities and Exchange Commission confirms this termination and its implications for the company’s financial position. Additionally, OXY is trading below all three recent purchases made by Berkshire Hathaway, marking its entry into what is referred to as the "Warren Buffett zone." The upcoming Q2 FY2024 earnings announcement is expected to report an EPS estimate of $0.86 and revenue of $6.9 billion. Lastly, the U.S. Non Farm Payrolls report indicated job growth below expectations, further contributing to volatility in the energy sector.

SU | -3.0% | -1.4B
Suncor Energy Inc is experiencing a notable decline, moving lower alongside the broader market and underperforming its sector peers. The stock has dropped significantly, correlating with a similar decrease in Occidental Petroleum Corp, which is also facing downward pressure following the termination of its exchange offer for CrownRock Notes. Additionally, WTI crude oil prices have seen a substantial drop, reflecting prevailing market sentiment. Suncor is expected to announce its Q2 FY2024 earnings after market close on August 6, 2024, with an EPS estimate of $0.77 and a revenue estimate of $9.4 billion, up from previous estimates.

CNQ | -2.7% | -2.0B
Canadian Natural Resources Ltd (CNQ) is experiencing a decline, moving in tandem with the broader market and sector, which are also significantly lower. Cenovus Energy Inc (CVE), historically correlated with CNQ, has dropped notably, reflecting the prevailing negative sentiment in the energy sector. Despite this price movement, CNQ recently reported a strong quarter characterized by increased profits driven by higher oil prices and production. The company boasts a diversified asset base across North America, the North Sea, and offshore Africa, emphasizing cost-effective development strategies that enhance shareholder value through its varied portfolio of natural gas, light crude oil, heavy crude oil, and in situ oil sands production.

CIVI | -7.7% | -476.0M
Civitas Resources Inc (CIVI) is currently experiencing a significant decline of 7.4%. The company reported Q2 earnings, revealing an earnings per share (EPS) of 2.06, which fell short of the expected 2.81 by nearly 27%. Revenue for the quarter was 1.31 billion, below the consensus estimate of 1.35 billion, despite showing a substantial year-over-year increase. Adjusted EBITDA was also below expectations at 918.1 million versus the anticipated 936.7 million. Additionally, Civitas has revised its full-year 2024 capital expenditure guidance down by 50 million, now set between 1.85 billion and 1.95 billion. The broader market is reflecting a downturn, with Occidental Petroleum Corp (OXY) also declining nearly 3%. Civitas is underperforming relative to its sector peers amid this market context.

MTDR | -5.3% | -372.1M
Matador Resources Co (MTDR) has experienced a significant price decline, moving lower in tandem with the broader market and underperforming its sector peers. This downward trend is reflected in the performance of Occidental Petroleum Corp (OXY), which has also dropped notably following its termination of an exchange offer for CrownRock Notes, adversely affecting its financial outlook. Additionally, oil prices (WTI) have decreased sharply, further aligning with the prevailing market sentiment that could influence MTDR's performance. Despite these challenges, analysts maintain a moderately bullish consensus on Matador, with several firms adjusting their price targets. Wells Fargo raised its target to $89, while Stephens lowered it to $81. Capital One upgraded its rating and increased its target to $84. Overall, the consensus reflects twelve buy ratings with an average target of $78.17.

SLB | -2.9% | -1.9B
Schlumberger NV is experiencing a notable decline, aligning with broader market and sector trends. The company's OneSubsea joint venture has secured a significant contract from Petrobras for the development of two ultra-deepwater projects in Brazil's Santos Basin, which includes subsea production systems aimed at enhancing production capabilities. This contract underscores Schlumberger's commitment to local content, as much of the technology will be produced and serviced at its Brazilian facilities. Concurrently, the energy sector faces volatility following disappointing US Non-Farm Payroll figures and a rise in the unemployment rate, contributing to market uncertainty. Additionally, Occidental Petroleum has seen a decline amid concerns regarding its financial position, while WTI crude oil prices have also dropped significantly, further influencing Schlumberger's stock movement.

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