Daily Brief Energy/Materials: Crude Oil, Korea Zinc, Copper, Harbour Energy, Energy Absolute, Natural Gas, Petroleos Mexicanos, NOV , Iron Ore and more

• Commodity markets are down despite stimulatory measures from China, with oil prices falling due to increased supply from Libya and OPEC plus alliance
• China’s demand outlook for oil remains steady, with forecasts for oil demand growth unchanged despite stimulus measures
• Base metals, particularly copper, have seen a price increase due to stronger demand impulses from China, with bullish outlook and potential upside risks for the first half of 2025

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• For the month of September 2024, 15 new transactions (firm and non-binding) were discussed on Smartkarma with an overall announced deal size of ~US$23bn. 
• The average premium for the new transactions announced (or first discussed) in September was ~43%. The average premium YTD is ~44%
• This compares to the average premium for transactions in 2023 (117 transactions), 2022 (106), 2021 (165), 2020 (158), and 2019 (145 ) of 39%, 41%, 33%, 31%, and 31% respectively.

• Did China Just Trigger Commodity Markets?
• China’s central bank last week announced a new stimulus package to the economy to curb the growth decline that is still going on.
• Chinese stocks jumped and also “Chinese-linked commodity prices” like soy, copper and steel gained momentum as Governor Pan Gongsheng announced plans to lower borrowing costs and inject more funds into the economy, as well as to ease households’ mortgage repayment burden.

• US rig count declined by one to 587 for the week ending 27/Sep, marking the sixth drop in seven weeks. Despite this, the rig count increased by six in Q3.
• The US oil rig count fell by four to 484 after staying flat last week. Gas rigs rose by three to 99, marking its second increase in six weeks.
• For the week ending 27/Sep, US energy producers added one rig in Texas and cut two in New Mexico and one in Louisiana.  

• Harbour Energy plans to acquire Wintershall Dea’s non-Russian upstream assets, which will triple its 2p resources, increase production, lower operating costs, and boost free cash flow
• This move will reduce HBR’s reliance on the UK Continental Shelf and diversify its resource base
• Despite concerns about the future of UK oil and gas producers, HBR’s stock presents a potential upside of over 100% within the next 12-18 months, making it an attractive investment opportunity.

This content is sourced through publicly available sources and has been machine generated. Information displayed is for general informational purposes only. This article was originally published 3 months ago on Value Investors Club.

• This flash note is an update for our readers on the indicative probability of default for Energy Absolute Public Company Limited (EA).
• We plotted EA’s probability of default, using Criat’s iRAP Global Plus PD Toolkit (iRap), against its peers, and we believe the chart indicated a high probability of default still.
• Given a lack of reliable bond quotes in the THB bond market, we continue to issue our report on EA without a recommendation.

• US natural gas prices jumped 19.2% for the week ending 27/Sept, marking the largest weekly increase since November 2023, driven by strong demand and concerns over supply cuts.
• Henry Hub Put/Call volume ratio fell to 1.03 (27/Sep) from 1.69 the previous week as put volumes fell by 45.5% WoW, while call volumes declined by 10.1%.
• Put OI increased for contracts expiring in October and November, while call OI rose for expiries in December, January, February, and March.

• We are initiating coverage on PEMEX with an Outperform recommendation.
• We think the potential reclassification to a public company will lead to an improved credit profile, resulting in spread compression due to the increased linkage with the sovereign.
• We prefer the PEMEX (B3/BBB/B+) 5.950% 2031, PEMEX 6.625% 2038, and PEMEX 7.690% 2050 bonds, as they are trading wide to the overall PEMEX curve.

• NOV Inc. has reported a strong performance in the second quarter of 2024, with revenues reaching $2.22 billion, indicating a 6% increase compared to the same period in 2023.
• Notably, international markets demonstrated double-digit growth, and the offshore sector grew by 6%, contrasting with a slight 1% decline in North American sales.
• The company achieved a net income of $226 million or $0.57 per fully diluted share, an improvement from the previous year.

• SGX Iron Ore futures surged by $10.24/ton to $102.09/ton last week, hitting the highest level since July, driven by China’s stimulus announcement.
• A bullish technical signal emerged as the 9-day moving average crossed over the 21-day, yet RSI overbought levels (72.35) suggest a potential correction.
• Trading volume spiked mid-week but thinned near $105/ton, indicating waning volume above $100/ton and setting up volatility for a short-term price drop.