Why Saudi Aramco Stock Is a Tough Sell on Wall Street -- Commodities Roundup

MARKET MOVEMENTS:

--Brent crude oil is up 0.2% at $81.29 a barrel

--European benchmark gas is up 10% at EUR37.66 a megawatt-hour

--Gold futures are up 0.2% at $2,351.50 a troy ounce

--LME three-month copper futures are up 0.4% at $10,109.00 a metric ton

TOP STORY:

Why Saudi Aramco Stock Is a Tough Sell on Wall Street

Saudi Aramco's generous dividends can only go so far in making up for an overpriced initial public offering.

The Saudi Arabian national oil company will sell shares worth up to $12 billion in an offering this week. The Saudi government, which will still own more than 80% of Aramco at the end of the sale, will use the proceeds to fund the country's cash-hungry Vision 2030 initiatives. Projects designed to help diversify the Saudi economy away from oil, such as futuristic desert city Neom, haven't attracted the flood of foreign capital Riyadh expected.

OTHER STORIES:

It's Crunchtime for a New Generation of Climate Startups

There is something more important going on in the Welsh city of Wrexham than two Hollywood stars making a feel-good TV show about a little-known soccer team.

At a swampy site just outside of town, Material Evolution is building a factory to make a low-carbon alternative to cement, a big contributor to global emissions. It is facing a tougher climb than the local soccer team's highly publicized effort to get promoted.

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Macquarie Backs U.S. Solar-Energy Developer Sol Systems

The asset management arm of Macquarie Group is backing renewable-energy company Sol Systems with an $85 million debt investment, riding a wave of U.S. demand for green power.

The infusion will support building and operating five utility-scale solar projects in Illinois and Ohio. Washington-based Sol's projects are expected to be completed by the end of 2025, according to the Australia-based infrastructure investor.

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Korea Gas Leads Energy Rally on Seoul's Offshore Oil Drilling Approval

Korea Gas led a rally in local oil-and-gas shares Monday after the government gave the greenlight to drill for fossil fuels off the country's southeast coast.

Shares of the South Korean state-run gas supplier rose as much as 30% to 38,700 won ($27.98) in afternoon trade, on course for their sharpest daily gain since listing in 1999, outperforming the benchmark Kospi's 1.9% rise.

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Naturgy to Invest EUR1.34 Bln in Spain's Electricity Grid to Boost Energy Transition

Naturgy said that UFD--the group's electricity distributor--plans to invest 1.34 billion euros ($1.45 billion) through 2027 in Spain's electricity grid to boost the country's energy transition.

The Spanish natural-gas and power utility said Monday that the figure represents a 11% increase from investments between 2020 and 2023. The bulk of the investment will be concentrated in the northwestern region of Galicia--where UFD is the main electricity distributor--with an allocation of EUR590 million between 2024 and 2027.

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China Electric-Vehicle Shares Rally After Strong Sales in May

Shares of Chinese electric-vehicle makers surged after some reported record sales in May, spurring hopes that more price cuts are around the corner as companies race to grow market share.

BYD, which trumped Tesla late last year to become the world's largest EV maker, saw its Hong Kong-listed shares gained 5.0% on Monday. The company also maintained its top position in China, selling more than 300,000 units for a third straight month in May.

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Hunting Wins $86 Mln Order From Kuwait Oil Company

Hunting received a $86 million oil-country tubular-goods order from Kuwait Oil Company, its second order from the group in recent weeks.

The oil-and-gas services company said Monday that the follow-on order is set to be delivered and recognized in 2025. Its oil-country tubular-goods casing and connections are similar to those of the first order announced on May 15, it added.

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Baker Hughes and Akastor Drilling Joint Venture HMH Eyes U.S. IPO

Drilling equipment provider HMH, the 50% joint venture between energy services group Baker Hughes and Norwegian oil-services investment company Akastor, intends to seek a U.S. listing.

HMH has submitted a first draft registration statement with the U.S. Securities and Exchange Commission relating to a proposed initial public offering, which represents the first step of a possible U.S. listing, Akastor said Monday.

MARKET TALKS:

Europe's Gas Prices Jump on Norway Outages -- Market Talk

1101 GMT - European natural gas prices jumped over 11% on Monday--the highest recorded so far this year--as outages in Norway raised fears over supplies. The benchmark Dutch TTF gas contract trades at EUR37.96 a megawatt hour. According to Norway's gas operator Gassco, an unplanned outage has occurred at the Nyhamna gas processing plant and it's not clear how long it will last. Meanwhile, flows into the Easington terminal--entry point for up to one third of the U.K.'s total gas supply--dived to zero. Norway currently plays a key role in Europe, as it has become the largest supplier of gas to the continent after Russian supplies were cut following the invasion of Ukraine. ([e-mail])

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Oil Market Faces Sizable Deficit in 3Q, Capital Economics Says -- Market Talk

0922 GMT - OPEC+'s decision to fully roll over voluntary output curbs for another quarter will push the oil market into a sizable deficit in 3Q and send prices higher, says Capital Economics' Bill Weatherburn. According to the senior climate and commodities analyst, the group's policy combined with a pickup in demand over the summer will see prices closer to $90 a barrel. Capital Economics now forecasts Brent crude, the international oil benchmark, at $80 a barrel at the end of the year from previous estimates of $75 a barrel. Next year, prices could instead be lower if OPEC+ sticks to its plan to phase out some of the cuts, and depending on the output of non-OPEC suppliers such as the U.S. and the global demand outlook. ([e-mail])

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Oil Prices Could Peak in 3Q After OPEC+ Extends Cuts -- Market Talk

0911 GMT - Oil prices could peak in 3Q after OPEC+ extended production cuts, ING analysts say in a note. Production cuts could drive the oil market into deficit, and push prices up during the peak demand season in 3Q, they say. However, the unwinding of voluntary cuts isn't set in stone, possibly causing uncertainty going into 4Q, and OPEC+ might have to react to market dynamics, the analysts add. The planned return of oil supply from October will likely lower prices after 3Q, they add. However, in the longer term, OPEC+ may have to either accept lower oil prices or risk losing further market share to non-OPEC+ producers, they add. ING keeps its current Brent forecast of $88/bbl for 3Q and $80/bbl for 2025. ([e-mail])

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Oil Market Expected to Be Oversupplied in 2025 If OPEC+ Phases Out Voluntary Cuts -- Market Talk

0901 GMT - The oil market is expected to be significantly oversupplied next year if OPEC+ sticks to its plan to phase out its voluntary output cuts, according to DNB Markets. The cartel and its allies currently aim to gradually reverse the 2.2 million barrels a day voluntary curbs from October 2024 to September 2025. "If OPEC+ moves according to plan we see no chance of Brent being above the $80 a barrel mark in 2025," the bank's senior energy analyst Helge Andre Martinsen says in a note. DNB sees a tight market balance in the summer, but says it estimates an oversupply of 0.3 million barrels a day next year even if all OPEC+ cuts, including the voluntary ones, are extended to the end of 2025.([e-mail])

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Larger Oil Inventory Draws Expected to Support Prices Over the Summer -- Market Talk

0811 GMT - Crude prices should be supported by falling global oil inventories over the summer as seasonal demand increases, says UBS's Giovanni Staunovo. According to the bank's strategist, OPEC+'s decision to phase out its voluntary cuts from October could cause some price volatility in the near term as some market participants think the cartel and its allies may flood the market with extra barrels. But "the group would likely only produce more if it believes those extra barrels will be absorbed by the market," Staunovo says in a note. "We retain a modestly positive outlook for crude prices, expecting larger oil inventory draws over the coming weeks to support prices," he adds. Brent crude currently trades 0.1% higher at $81.22 a barrel, while WTI is up 0.2% at $77.12 a barrel. ([e-mail])

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Metal Prices Mixed, With Gold Flat After Friday's Inflation Data -- Market Talk

0807 GMT - Metal prices are mixed, with gold futures broadly flat at $2,345.0 a troy ounce. The precious metal is trading sideways after Friday's Personal Consumption Expenditures data showed U.S. inflation had stabilized, slightly boosting hoping for an earlier cut in interest rates by the Federal Reserve. Gold typically has an inverse relationship with interest rates, with higher rates damping investor enthusiasm for non-interest bearing bullion. Elsewhere, aluminum rises 0.2% to $2,661.5 a ton, while copper falls 0.1% to $10,058 a ton. Aluminum prices stayed resilient last week, despite a sharper pullback in copper prices, JPMorgan analysts say in a note. Aluminum prices could be set to slip in the near-term too, as prices appear to be running hot compared to market fundamentals, JPM says.([e-mail])

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Oil Broadly Steady After OPEC+ Extended Cuts Into 2025 -- Market Talk

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06-03-24 0741ET