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Sector Update: Energy Stocks Decline Wednesday Afternoon

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Energy stocks were lower Wednesday afternoon, with the NYSE Energy Sector Index decreasing 0.8% and the State Street Energy Select Sector SPDR ETF (XLE) down 0.3%.

The Philadelphia Oil Service Sector Index shed 1.6%, and the Dow Jones US Utilities Index declined 1.3%.

On Wednesday, the US and Iran held indirect technical talks in Doha as they seek to agree on the flow of shipping through the Strait of Hormuz and secure a lasting ceasefire, a source with direct knowledge of the talks and an Iranian official told Reuters.

Front-month West Texas Intermediate crude oil fell 1.8% to $68.26 a barrel, and the global benchmark Brent crude contract dropped 2.3% to $71.25 a barrel. Henry Hub natural gas futures shed 1.6% to $3.22 per 1 million BTU.

In sector news, US crude oil stocks, including those in the Strategic Petroleum Reserve, fell by 9.3 million barrels in the week ended June 26 following a fall of 15.1 million barrels in the previous week. Excluding inventories in the SPR, commercial crude oil stocks declined by 3.8 million barrels after a 6.1 million barrel decrease in the previous week, a larger decline than the 2.2 million barrel decrease expected in a Bloomberg survey.

In corporate news, Sable Offshore (SOC) shares surged 36% after the firm said Wednesday it has priced a combined equity and debt offering to raise capital and refinance borrowings tied to its energy assets. Proceeds will be used to repay a senior secured term loan with Exxon Mobil (XOM), as well as for transaction costs and general corporate purposes, Sable said. Exxon shares were down 0.2%.

Eni (E) said it agreed with Mercuria to establish an equally owned joint venture to oversee energy commodities trading activities across global markets. Shares were down 2.5%.

Equinor (EQNR) has entered into a letter of intent with Transocean (RIG) to charter three Cat D rigs for operations on the Norwegian continental shelf under an agreement valued at about $1 billion, the company said Wednesday. Equinor shares were 0.2% lower, and Transocean was down 0.8%.

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