CA - Wall Street Breakfast Podcast: Oil Futures Soar Before Sliding

2023-09-06 07:01:11 ET

Summary

• Saudi Arabia and Russia extend voluntary oil production cuts through the end of the year, causing crude oil prices to spike.
• Enbridge announces a $14 billion deal to buy three utilities from Dominion Energy, creating the largest natural-gas utility in North America.
• Kroger is in talks to sell grocery stores to C&S Wholesalers in order to gain antitrust approval for their planned merger.

Listen below or on the go on Apple Podcasts and Spotify Oil jumps to 10-month high as Saudi Arabia, Russia prolong cuts in output. (00:31) Enbridge's ( ENB ) falls on deal to buy 3 utilities from Dominion ( D ) for $14B. (01:30) Kroger (KR), Albertsons ( ACI ) in talks to sell grocery stores to C&S Wholesalers - report. (02:03)

This is an abridged transcript of the podcast.

Saudi Arabia and Russia announced that they’re extending their voluntary oil production cuts through the end of the year.

Crude oil prices spiked on the news Tuesday as much as 2.7% to the highest since November.

Front-month Nymex crude oil (CL1:COM) futures for October rose above $87 a barrel. Brent crude futures (CO1:COM) for October climbed to more than $90 a barrel. At last check those prices are coming in at nearly $86 and less than $90, respectively.

The cuts amount to 1.3M barrels a day.

If you remember, in July, Saudi Arabia cut one million barrels a day, or about 10% of its typical output. The country’s reduction makes up more than a third of the total cuts made by the Organization of the Petroleum Exporting Countries and its allies since last year. Russia’s voluntary cut is 300,000 barrels a day.

Crude prices have climbed about 30% since mid-June on lower global supplies.

Enbridge (NYSE: ENB ) on Tuesday said it reached three deals with Dominion Energy (NYSE: D ) to buy East Ohio Gas Co, Questar Gas and Public Service Company of North Carolina for a combined value of $14 billion.

The agreements will create the biggest natural-gas utility in North America.

Enbridge ( ENB ) said in a statement, that the terms include $9.4 billion of cash and $4.6 billion of assumed debt.

Premarket Enbridge ( ENB ) is down nearly 8%.

Enbridge ( ENB ) expects the deals to close next year.

Kroger (NYSE: KR ) is in talks with C&S Wholesalers to sell grocery stores in an effort to gain antitrust approval for its planned $24 billion purchase of Albertsons (NYSE:ACI).

According to a Bloomberg report on Tuesday, which cited people familiar with the matter, C&S Wholesalers, with backing from Japan's Softbank Group (OTCPK:SFTBY), could announce a deal to buy grocery stores this week.

The supermarket chains said in October that they would spin off 100 to 375 stores if they couldn’t find buyers for them.

According to the report, it's not known how many stores C&S plans to purchase or how much it will pay for them.

Kroger ( KR ) is trying to get the Albertsons ( ACI ) megadeal across the finish line.

Last month, seven states asked the Federal Trade Commission to block the combination.

The push from the states comes as Albertsons ( ACI ) and Kroger await word from the FTC on whether the regulator will bless the mega supermarket deal or move to challenge it in court.

There have been some reports that the FTC may make a decision by early fall.

Last month, a judge tossed out a lawsuit by a group of consumers who sued to block the Albertsons ( ACI ) deal.

Kroger ( KR ) is set to report Q2 results on Friday.

Abbott Laboratories (NYSE: ABT ) announced the acquisition of Bigfoot Biomedical, a company involved in developing insulin management systems for people with diabetes.

The transaction is expected to close in the third quarter of 2023.

Other headlines to look out for on Seeking Alpha:

FTC expected to file antitrust lawsuit against Amazon later this month - report

Healthcare services provider Syra downsizes proposed IPO to $6M

Zoom CEO says FTC should look into Teams bundling in US

On our catalyst watch for the day,

• HubSpot ( HUBS ) will host its Analyst Day in conjunction with the INBOUND 23 conference. Align Technology ( ALGN ) will hold an Investor Day event. Intuit ( INTU ) will host an Innovation Day event.

• Shareholders with Diversified Healthcare Trust ( DHC ) and Office Properties Income Trust ( OPI ) will hold shareholder votes on their pending business combination. Major proxy firms have recommended against the deal.

Coming off the long Labor Day weekend, U.S. stocks on Tuesday ended lower.

The Nasdaq ( COMP.IND ) closed slightly lower by 0.08%. The S&P 500 (SP500) retreated 0.42% while the Dow ( DJI ) slipped 0.56%.

Of the 11 S&P sectors, eight ended in negative territory, led by Materials and Industrials. Energy topped the gainers.

Turning to the fixed-income market, Treasury yields were higher. The 10-year yield (US10Y) was up 6 basis points to 4.27%, while the 2-year yield (US2Y) was up 5 basis points to 4.96%.

Now let’s take a look at the markets as of 6 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are in the red. The Dow is down 0.1%, the S&P 500 is down 0.2% and the Nasdaq is down 0.3%. Crude oil is down 0.6% at more than $86 a barrel. Bitcoin is down a small fraction at more than $25,000.

In the world markets, the FTSE 100 is down 0.7% and the DAX is down 0.3%.

The biggest stock movers for the day premarket: AeroVironment (NASDAQ: AVAV ) is up more than 15% after the drone maker announced an improved profit outlook. .

On today’s economic calendar, at 8:30 a.m. Boston Federal Reserve Bank President Susan Collins will give a talk on the economy and policy making, and participate in a question-and-answer session before the New England Council.

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