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.
0906 ET – Oil futures extend gains in early U.S. trade with support from geopolitical risk around Venezuela and the Russia-Ukraine peace efforts. “We feel that excessive optimism regarding a quick peace agreement between Ukraine and Russia has been quelled for now,” Ritterbusch and Associates says in a note. The firm sees risk to Venezuelan supply as “less supportive” than developments in Russia-Ukraine. And with abundant global supply, “crude fundamentals continue to provide a significant offset against the geopolitical factor.” WTI is up 0.2% at $58.52 a barrel, and Brent edges up 0.1% to $62.44.(anthony.harrup@wsj.com)
0545 ET – The sale of BP’s stake in its Castrol lubricants business is a positive step forward, with the price tag broadly in line with expectations, Quilter Cheviot analyst Maurizio Carulli writes. The oil major is selling 65% of the business, rather than the 100% hoped for, retaining the rest under a joint venture with Stonepeak. Still, BP has an option to sell its remaining stake in the joint venture after a two-year lockup period. The deal reinforces BP’s strategy reset, which was started by former CEO Murray Auchincloss and expected to be accelerated by incoming CEO Meg O’Neill, Carulli writes. Shares are up 0.05% at 427.70 pence. (ian.walker@wsj.com.)
0509 ET – BP’s Castrol lubricants business sale is detrimental to the long-term dividend sustainability and earnings quality of the group, RBC analysts write, questioning the rational behind the deal. “We think the better long-term option would have been to cut the buyback as it has been funded by the balance sheet anyway, or look to divest some of the upstream assets in development,” they say. BP is selling a 65% stake in Castrol for $8 billion and plans to use the money to cut debt. Shares are up 0.1% at 4.28 pounds and have risen 8.8% over the year to date. (ian.walker@wsj.com)
0453 ET – BP investors seem happy with the price the company got for the sale of a majority share of its Castrol lubricants business, AJ Bell investment director Russ Mould writes. The next key test will be the company’s strategic review which is expected in February, he adds. Newly appointed Chair Albert Manifold and incoming CEO Meg O’Neill might have an easier job to deliver radical change to the company than former CEO Murray Auchincloss given that they are both outsiders, Mould adds. “Auchincloss arguably never recovered from his own strategic reset in February this year which fell short of most investors’ expectations, so BP cannot afford a similar disappointment this time around,” he says. Shares are flat at 427.50 pence and up 8.8% over the year to date. (ian.walker@wsj.com.)
