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Commodities

Midstream M&A Gains Momentum as Permian, Power Demand Support Growth, RBC Says

Midstream mergers and acquisitions are accelerating as companies pursue scale and new volumes, while RBC's preferred picks offer growth tied to gas, power and Permian demand, RBC Capital Markets said in a Friday note.The Alerian Midstream Index gained 0.6% for the week ended Sep. 10, compared with a 2% decline for the S&P 500 as West Texas Intermediate crude rose about 12% to $102.48 per barrel.Year to date, the AMZ has advanced 25.5% versus a 10.9% rise for the S&P 500, outperforming utilities and real estate investment trusts by 2,473 and 1,305 basis points.The AMZ remains behind oilfield services and exploration and production stocks by 2,208 and 2,933 basis points, respectively, while Henry Hub natural gas declined about 3% to $2.83 per million British thermal units.Venture Global (VG) led RBC's coverage universe with a 7.0% weekly gain, helped by higher Dutch Title Transfer Facility prices, while Cheniere Energy (LNG) fell 4.5% after missing the latest S&P 500 rebalance.Master limited partnerships rose 0.4% over the week and outperformed C-corporations, which slipped 0.1%, while RBC estimates its coverage universe trades at 10.3 times 2027 estimated enterprise value to EBITDA.RBC said midstream deal activity has accelerated, citing ONEOK's (OKE) acquisition of Brazos Midstream's Permian Midland assets and renewed market attention on a potential Kinetik (KNTK) sale.RBC has long viewed Kinetik Holdings as an attractive acquisition target because of its Permian presence, natural gas liquids exposure and New Mexico sour-gas capabilities, which could add scale and near-term growth.Kinetik could benefit from stronger customer demand in New Mexico, including an expansion of its KL2 processing plant, which RBC expects to enter service in mid-2028.RBC also noted that external insurance capital could help finance acquisitions.The US Third Circuit Court of Appeals vacated a water-quality certificate for the Northeast Supply Enhancement project on technical and procedural grounds, sending the matter back to the New Jersey Department of Environmental Protection.Williams (WMB) does not expect the ruling to affect construction and continues to target an in-service date in the fourth quarter of 2027, while viewing the remand as a path to resolve the outstanding issues.RBC sees Kinetik well positioned for growth in the second half of 2026 and beyond as new Permian gas takeaway capacity comes online and producer interest rises across the Northern Delaware Basin.A May 2026 federal lease sale generated about $4 billion in bids, compared with the prior record of $972 million in 2018, underscoring the scale of producer interest in the Northern Delaware Basin.Kinetik Holdings has built its sour-gas handling system, giving it an advantage over new entrants because permits for acid-gas injection wells can take more than three years.RBC expects Kodiak Gas Services (KGS) to deliver about 16% annual adjusted EBITDA growth over five years, supported by Permian production, tight compression capacity and rising data-center power demand.RBC favors Targa Resources (TRGP), citing customer-backed growth projects that reduce capital-spending risk, expanded customer agreements and exposure to well-capitalized Permian producers. Rising gas-to-oil ratios could also support mid-single-digit gas growth.RBC also favors Williams, which it sees benefiting from rising power and natural gas demand through 2030 and beyond. The company targets more than 11% adjusted EBITDA growth through 2030.Midstream M&A Gains Momentum as Permian, Power Demand Support Growth, RBC Says

$KGS$KNTK$LNG$OKE$TRGP$VG$WMB
Palo Alto Beats Fiscal Fourth-Quarter Estimates; Gross Margin Declines
US Markets

Palo Alto Beats Fiscal Fourth-Quarter Estimates; Gross Margin Declines

Palo Alto Networks (PANW) fiscal fourth-quarter results came in ahead of Wall Street's estimates, but the cybersecurity firm's shares fell early Wednesday amid margin and cost pressures.Adjusted gross margin came in at 74.8% for the quarter ended July, down from 75.8% the year before, the company said late Tuesday. The stock decreased 1.8% in the most recent premarket activity.The decline reflected a mix shift toward Palo Alto's faster-growing software-as-a-service offerings, which continued to scale and "have yet to reach their gross margin maturity," Chief Financial Officer Dipak Golechha said during an earnings call, according to a FactSet transcript. "Looking ahead, the growing majority of revenue is cloud and SaaS, and we anticipate that mix shift will drive our cloud hosting costs faster than total revenue in fiscal year 2027," according to Golechha.The company expects rising commodity costs to persist in its hardware business, especially related to memory and storage, Golechha said on the call. "We continue to manage our component cost exposure through our strategic supplier relationships and selective pricing actions across our portfolio of hardware products," the CFO added.Palo Alto reported adjusted earnings of $1.02 a share for the fourth quarter, up from $0.95 in the prior-year quarter, ahead of the FactSet-polled consensus of $0.98. Revenue climbed 34% to $3.41 billion, topping the Street's view for $3.35 billion.Subscription and support revenue increased to $2.67 billion from $1.96 billion, while product sales gained to $738 million from $574 million. Next-generation security annual recurring revenue, or ARR, surged 63% on a yearly basis to $9.1 billion, surpassing the average analyst estimate of $8.93 billion."This performance is a direct result of record-breaking platformization adoption and the growing urgency among customers to fortify their defenses as (artificial intelligence) fundamentally redefines the security landscape," Chief Executive Nikesh Arora said on the call.The company expects AI tailwinds driving cybersecurity demand to intensify in the future, according to Arora. The development of global AI infrastructure is requiring trillions in investment, and the firm expects "more capital expenditure in the next five years than the preceding two decades," Arora told analysts."There is approximately $1 trillion of global cybersecurity debt that must be modernized to defend against automated threats," the CEO added.Last month, Morgan Stanley said in a client note that Palo Alto was among the cybersecurity companies positioned to benefit from a shift toward new identity-security architectures and platforms as the growing use of autonomous AI agents creates new security risks.For fiscal 2027, Palo Alto projects adjusted EPS to come in between $4.16 and $4.19 on a revenue range of $14.1 billion to $14.2 billion. The Street is looking for non-GAAP EPS of $4.14 and sales of $13.97 billion. In the previous fiscal year, adjusted EPS came in at $3.84 and revenue amounted to $11.48 billion.Next-generation security ARR is pegged at $11.08 billion to $11.18 billion for the ongoing fiscal year, representing annual growth of 22% to 23%. The market's current forecast is for $11.02 billion.Last week, rival CrowdStrike (CRWD) raised its full-year net new ARR outlook amid increasing demand for cybersecurity solutions to address AI risks, while the firm reported better-than-expected fiscal second-quarter results.For the first quarter, Palo Alto anticipates adjusted EPS of $0.96 to $0.98 on revenue of $3.3 billion to $3.31 billion. The current consensus on FactSet is for non-GAAP EPS of $0.95 and sales of $3.26 billion. Next-generation security ARR is seen at $9.54 billion to $9.56 billion, reflecting a year-over-year gain of 63%.

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Sectors

Sector Update: Energy Stocks Gain Monday

Energy stocks rose Monday with the NYSE Energy Sector Index gaining 1.9% and the State Street Energy Select Sector SPDR ETF (XLE) adding 2%.The Philadelphia Oil Service Sector Index advanced 2.1%, and the Dow Jones US Utilities Index fell 1.4%.Oil prices rose as investors weighed renewed Washington-Tehran military escalation. President Donald Trump said the US will respond to an Iranian attack on US forces overnight in Jordan, Fox News reported.West Texas Intermediate crude oil rose 2.8% to $85.77 a barrel, and global benchmark Brent advanced 2.5% to $90.30 a barrel. Henry Hub natural gas futures added 1.3% to $2.93 per 1 million BTU.In sector news, the US government plans to acquire a 35% passive stake in Alejandro Betancourt's North American Blue Energy Partners and secure preferential rights to buy 20% of the company's oil production in Venezuela at cost, the Wall Street Journal reported over the weekend.Trump is expected to host executives of oil refining companies on Tuesday, Reuters reported. The companies received invitations last week that were light on details, and they were not informed who else would be in attendance, the report said.In corporate news, Helix Energy Solutions' (HLX) shareholders approved all proposals required to complete an all-stock combination with Hornbeck Offshore Services. Helix Energy shares rose 1.6%.Oneok (OKE) agreed to acquire Brazos Midstream's natural gas gathering and processing assets in the Permian Midland Basin for $4.43 billion. Oneok shares rose 1.3%.SLB (SLB) agreed to buy cooling equipment maker Kelvion from Apollo Global Management (APO) for $4.1 billion, including debt. SLB shares rose 4.9%.PG&E (PCG), Edison International (EIX) and Sempra (SRE) shares slumped after the state of California reportedly amended legislation to protect wildfire survivors' right to sue utilities for equipment-caused blazes. PG&E shares tumbled 20%, Edison plunged 23%, and Sempra fell 3.1%.

$EIX$HLX$OKE$PCG$SLB$SRE
Sectors

Sector Update: Energy Stocks Rise Monday Afternoon

Energy stocks were higher Monday afternoon, with the NYSE Energy Sector Index rising 1.4% and the State Street Energy Select Sector SPDR ETF (XLE) adding 1.6%.The Philadelphia Oil Service Sector Index was advancing 1.6%, and the Dow Jones US Utilities Index was falling 1.4%.Oil prices rose as investors weighed renewed Washington-Tehran military escalation. President Donald Trump said the US will respond to an Iranian attack on US forces overnight in Jordan, Fox News reported. US air defenses intercepted all but one Iranian missile, which was allowed through because it was not expected to hit anything of consequence, the report said, citing the president.Front-month West Texas Intermediate crude oil rose 2.7% to $85.63 a barrel, and the global benchmark Brent crude contract advanced 4.9% to $90.31 a barrel. Henry Hub natural gas futures added 1.5% to $2.93 per 1 million BTU.In sector news, the US government plans to acquire a 35% passive stake in Alejandro Betancourt's North American Blue Energy Partners and secure preferential rights to buy 20% of the company's oil production in Venezuela at cost, The Wall Street Journal reported over the weekend, citing people involved in negotiating the agreement. The company is expected to have the opportunity to develop 17 oil fields with reported reserves of 65 billion barrels of oil, according to the report.President Donald Trump is expected to host executives of oil refining companies on Tuesday, Reuters reported Monday, citing people familiar with the plans. The companies received invitations last week that were light on details, and they were not informed who else would be in attendance, the report said, citing the people.In corporate news, ONEOK (OKE) agreed to acquire Brazos Midstream's natural gas gathering and processing assets in the Permian Midland Basin in a deal worth roughly $4.43 billion, as the midstream operator aims to expand its energy infrastructure in the region. ONEOK shares were up 0.5%.SLB (SLB) agreed to buy cooling equipment maker Kelvion from Apollo Global Management (APO) in a deal worth $4.1 billion, including debt, as it looked to boost its data center solutions business. SLB shares rose 3.4%.PG&E (PCG), Edison International (EIX) and Sempra (SRE) shares fell Monday after the state of California reportedly amended legislation to protect wildfire survivors' right to sue utilities for equipment-caused blazes. PG&E shares were down 18%, Edison fell 24%, and Sempra shed 3%.

$EIX$OKE$PCG$SLB$SRE
Sectors

Sector Update: Energy

Energy stocks were higher Monday afternoon, with the NYSE Energy Sector Index rising 0.9% and the State Street Energy Select Sector SPDR ETF (XLE) adding 1.2%.The Philadelphia Oil Service Sector Index was advancing 1.2%, and the Dow Jones US Utilities Index was falling 1.2%.Front-month West Texas Intermediate crude oil rose 2.8% to $85.75 a barrel, and the global benchmark Brent crude contract advanced 2.7% to $90.47 a barrel. Henry Hub natural gas futures added 1.5% to $2.93 per 1 million BTU.In corporate news, ONEOK (OKE) agreed to acquire Brazos Midstream's natural gas gathering and processing assets in the Permian Midland Basin in a deal worth roughly $4.43 billion, as the midstream operator aims to expand its energy infrastructure in the region. ONEOK shares were up 0.1%.

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Wire

Top Midday Stories: Stocks Fall, Oil Rises Amid Renewed Fighting in Middle East; Utility Shares Fall After California Wildfire Legislation

All three major US stock indexes were down in late-morning trading Monday, after Fox News reported that President Donald Trump said the US will respond to an Iranian attack on US forces overnight in Jordan.In company news, Shares of PG&E (PCG), Edison International (EIX) and Sempra (SRE) fell Monday after the state of California amended legislation to protect wildfire survivors' right to sue utilities for equipment-caused blazes, ABC7 reported Sunday. The legislature rejected provisions in Senate Bill 492 that would limit the amount of money people could recover. The amended bill also doesn't limit local governments and private businesses from recovering losses from utilities that start fires, according to the report. PG&E shares were down 19.5% around midday, while Edison and Sempra shares were down 23.0% and 2.5%, respectively.Nvidia (NVDA) has invested $3.5 billion in MediaTek convertible bonds as part of a deepening partnership to build next-generation artificial intelligence computing platforms across AI infrastructure, local AI computing and automotive, the companies said Monday in a joint statement. Nvidia shares were up 1%.Apollo Global Management-managed (APO) funds have agreed to sell cooling systems company Kelvion to SLB (SLB) for $3.4 billion in cash, with SLB assuming about $700 million of debt as well, the companies said Monday. Apollo shares were up 1.4%, while SLB shares were up 2.2%.Eli Lilly (LLY) said Monday it has agreed to acquire Merida Biosciences for up to $2.88 billion in cash, including upfront and milestone payments, to expand its pipeline of treatments for autoimmune and allergic diseases. The deal is expected to close in Q4, subject to regulatory approvals and other customary closing conditions, Lilly said. Shares of Eli Lilly were down 1.4%.Oneok (OKE) said Sunday it has agreed to acquire Brazos Midstream's Permian Midland Basin natural gas gathering and processing facilities for about $4.43 billion. The deal will be funded via a $9 billion non-voting minority equity investment from funds and affiliates managed by Apollo, the company said. Oneok shares were up 0.5%.SpaceX (SPCX) and NASA are delaying their launch date for the Crew-13 manned mission to the International Space Station in order to address an oxidizer leak on the propulsion system of the Dragon spacecraft, the space agency said Saturday. Separately, SpaceX is developing a foundry in Bastrop, Texas, to make blades and vanes for large gas turbines, The Information reported Saturday, citing job listings and other indicators. SpaceX shares were up 1%.Aon (AON) has agreed to acquire USI Insurance Services from KKR (KKR) and other shareholders for $17 billion, the companies said Monday. The boards of Aon and USI have approved the deal, which is expected to close in Q4 and will generate about $3.3 billion of after-tax proceeds for KKR. Aon shares were down 7%, while KKR shares were up 1.5%.Price: $219.81, Change: $+2.26, Percent Change: +1.04%

$AON$APO$EIX$KKR$LLY$NVDA$OKE$PCG$SLB$SPCX$SRE
Sectors

Sector Update: Energy Stocks Advance Premarket Monday

Energy stocks were advancing premarket Monday, with the State Street Energy Select Sector SPDR ETF (XLE) 1.7% higher.The United States Oil Fund (USO) was up 2.7% and the United States Natural Gas Fund (UNG) was less than 1% higher.Front-month US West Texas Intermediate crude oil was 2.5% higher at $85.52 per barrel at the New York Mercantile Exchange. Global benchmark North Sea Brent crude oil rose 2.5% to $90.26 per barrel, and natural gas futures were up 0.2% at $2.89 per 1 million British Thermal Units.Apollo Global Management (APO) said funds it manages have agreed to sell cooling systems firm Kelvion to SLB (SLB) for $3.4 billion in cash, with SLB assuming approximately $700 million of debt, the companies said. Shares of SLB were up nearly 2% pre-bell.Eni (E) entered Uruguay's offshore sector through an agreement with MIWEN, a wholly owned subsidiary of YPF, and ANCAP to join the OFF-5 exploration block, following regulatory approval, the company said. Eni shares were up more than 2% premarket.Oneok (OKE) stock was up more than 1% after the company said it has agreed to acquire Brazos Midstream's Permian Midland Basin natural gas gathering and processing facilities for about $4.43 billion.

$APO$E$OKE$SLB$UNG$USO$XLE
ONEOK to Acquire Brazos Midstream's Permian Midland Basin Assets in $4.43 Billion Deal
US Markets

ONEOK to Acquire Brazos Midstream's Permian Midland Basin Assets in $4.43 Billion Deal

ONEOK (OKE) agreed to acquire Brazos Midstream's natural gas gathering and processing assets in the Permian Midland Basin in a deal worth roughly $4.43 billion, as the midstream operator aims to expand its energy infrastructure in the region.ONEOK plans to fund the acquisition through a separate $9 billion nonvoting minority equity investment in its business from funds and affiliates managed by Apollo Global Management (APO), the company said Sunday. The firm intends to use about $5 billion of proceeds from the Apollo investment to reduce its debt.Shares of ONEOK rose 0.7% in Monday's most recent premarket activity, while Apollo was slightly in the green."This transaction demonstrates ONEOK's strategy of intentionally expanding and extending our integrated energy infrastructure," Chief Executive Pierce Norton II said in a statement. "The acquisition expands our scale in the Permian Midland Basin, advances our integrated wellhead-to-water strategy and strengthens connectivity across our natural gas and (natural gas liquid) value chain, positioning ONEOK to capture significant volume growth in one of the most economic and rapidly growing resource plays."The acquisition is projected to more than double ONEOK's Midland Basin processing capacity to roughly 2.3 billion cubic feet per day, including plants currently under construction. Following completion of the Cassidy II processing plant in the third quarter of 2027, the Brazos Midland system is expected to include 1.2 billion cubic feet per day of processing capacity across seven core Permian Midland Basin counties, according to ONEOK.ONEOK estimates the Brazos assets purchase to be immediately accretive to its earnings and free cash flow on a per-share basis.The company also expects about $80 million in full-year synergies from the transaction, which is also anticipated to help drive ONEOK towards the high end of its mid- to high-single-digit adjusted earnings before interest, taxes, depreciation and amortization growth target over the next five to seven years.The deal is expected to complete in the fourth quarter, ONEOK said. The company anticipates Apollo's minority equity investment to close in the first half of September."This transaction reflects Apollo's ability to deliver flexible, high-grade capital solutions at scale, structured around ONEOK's long-term strategic objectives," according to Apollo Partner Jamshid Ehsani.Earlier in August, ONEOK reported second-quarter earnings of $1.53 a share, up from $1.34 the year before. At the time, the company said it expected EPS of $5.68 at the midpoint for 2026, while the current consensus on FactSet is for $5.77.

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Equities

Oneok to Acquire Brazos Midstream Permian Basin Assets for About $4.43 Billion

Oneok (OKE) said Sunday it has agreed to acquire Brazos Midstream's Permian Midland Basin natural gas gathering and processing facilities for about $4.43 billion.The acquisition will be funded through a $9 billion non-voting minority equity investment from funds and affiliates managed by Apollo Global Management (APO).The purchase of the Permian Basin assets positions Oneok for long-term growth and will double processing capacity and accelerate deleveraging.Oneok said it intends to use $5 billion of proceeds from the equity investment to reduce its debt.The deal is set to close in Q4, subject to customary closing conditions.

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Equities

ONEOK Q2 Earnings, Revenue Rise

ONEOK (OKE) reported Q2 earnings late Monday of $1.53 per diluted share, up from $1.34 a year earlier.Analysts polled by FactSet expected $1.46.Revenue for the three months ended June 30 rose $12.05 billion from $7.89 billion a year earlier.Analysts expected $8.95 billion, if comparable.The company said it now expects 2026 earnings of $5.68 per diluted share at the midpoint. Analyst expect $5.68.

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Research

Morgan Stanley Downgrades ONEOK to Equalweight From Overweight, Adjusts PT to $103 From $113

ONEOK (OKE) has an average rating of overweight and mean price target of $95.80, according to analysts polled by FactSet.

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Wire

Raymond James Adjusts Price Target on ONEOK to $95 From $92, Maintains Outperform Rating

ONEOK (OKE) has an average rating of overweight and mean price target of $96.15, according to analysts polled by FactSet.Price: $94.79, Change: $+1.56, Percent Change: +1.67%

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Commodities

Commodity Prices, Export Demand to Drive Strong US Midstream Q2 Earnings, RBC Says

Commodity prices, export demand and new infrastructure should drive strong second-quarter US midstream earnings across the sector, RBC Capital Markets said in a Tuesday note.Waha basis spreads, spot export cargoes, expanding natural gas and power demand continue to provide favorable operating conditions for the sector, RBC said.RBC expects the Iran conflict and additional Permian pipeline capacity to strengthen long-term demand for US hydrocarbons, support new export infrastructure and restore previously curtailed production as takeaway constraints ease.RBC highlighted Kinetik Holdings (KNTK) and Targa Resources (TRGP) as its preferred picks, expecting both companies to post solid second-quarter results.The firm expects Kinetik to enter the second half of 2026 and 2027 with positive momentum, while Targa should benefit from supportive commodity prices and rising gas volumes as new takeaway capacity comes online.Kinder Morgan (KMI) could transfer projects from its shadow backlog into its formal project backlog during the quarter, while Williams (WMB) may provide updates on its Power Innovation financing platform, new power projects and Momentum Midstream, RBC said.RBC's second-quarter EBITDA forecasts remain within 2% of consensus across most of its coverage. It projects Venture Global (VG) about 4.4% above consensus after incorporating recent cargo and fee disclosures.RBC also expects Targa to outperform consensus on stronger-than-expected volume growth. Kinetik's margins should offset curtailed production, while the Kings Landing 2 final investment decision supports higher future output.Waha natural gas prices averaged negative $3.10 per million British thermal units during Q2 and briefly fell to about negative $8/MMBtu before recovering as additional pipeline capacity eased transportation constraints.The 570 million cubic feet per day Gulf Coast Express pipeline expansion entered service late in the quarter, helping restore some curtailed volumes. Energy Transfer (ET) also expects the first 1.5 billion cubic feet per day phase of the Hugh Brinson Pipeline to start in Q4, with some flows possible in Q3.RBC expects 5.27 Bcf/d of new Permian takeaway capacity to enter service between mid-2026 and Q1 of 2027, creating favorable conditions for higher regional production.The Iran conflict has increased spot exports of liquefied petroleum gas, crude oil and liquefied natural gas while reinforcing the need for diversified energy supplies, supporting long-term demand for US hydrocarbons and export infrastructure, RBC said.RBC identified Energy Transfer, Enterprise Products Partners, Targa Resources, ONEOK (OKE), Cheniere Energy (LNG) and Venture Global among the companies positioned to benefit from stronger export demand and future infrastructure investment.The firm also expects natural gas demand to remain a long-term growth driver as US liquefied natural gas export capacity nearly doubles by 2030 and electricity demand rises from reshoring, electrification, artificial intelligence and data center expansion, benefiting Williams and Kinder Morgan.Price: $50.47, Change: $-0.64, Percent Change: -1.25%

$ET$KMI$KNTK$LNG$OKE$TRGP$VG$WMB
Research

RBC Raises Price Target on ONEOK to $90 From $84, Keeps Sector Perform Rating

ONEOK (OKE) has an average rating of overweight and mean price target of $96.15, according to analysts polled by FactSet.

$OKE
Research

Jefferies Downgrades ONEOK to Hold From Buy, Adjusts Price Target to $95 From $100

ONEOK (OKE) has an average rating of overweight and mean price target of $95.85, according to analysts polled by FactSet.

$OKE
Wire

ONEOK to Meet 2026 Outlook as Seasonal Strength, AI Demand Support Growth, UBS Says

ONEOK (OKE) should remain within its 2026 forecast as seasonal gains, export demand, AI-linked power projects and new growth investments support results, while lower pipeline volumes and commodity conditions remain key factors, UBS said in a note Thursday.UBS expects Q2 earnings before interest, taxes, depreciation, and amortization to rise to $2.06 billion from $2 billion in Q1, helped by stronger seasonal results across most business units, while earnings are expected to improve from gathering and processing, refined products and crude operations, partly offset by weaker natural gas pipeline results and slightly lower natural gas liquids earnings.Higher demand for US natural gas liquids could support ONEOK's planned Texas City export terminal, where customer interest in capacity remains strong and UBS also sees possible growth from talks with large technology companies about gas supply for AI-related power projects, including facilities with about 5 gigawatts of capacity.Investors will likely focus on economic conditions, commodity prices, project progress, spending plans, capital allocation and possible acquisitions during the earnings call, the investment firm said.UBS kept its buy rating and $108 price target for ONEOK.Price: $90.60, Change: $-0.56, Percent Change: -0.61%

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Oil & Energy

Gulf Supply Shock Redraws Global Crude Trade as Canada, Asia Adjust, Wood Mackenzie Says

Effective closure of the Strait of Hormuz resulted in forced shut-ins of about 11 million barrels per day of production at the peak of the conflict, forcing major importers to redraw supply chains, Wood Mackenzie said in note on a Thursday.The shut-ins and force majeure reshaped global crude and fuel markets, the research firm said, citing satellite-based production monitor estimated. Iraq's output dropped from 4.5 mmbbl/d to 820,000 b/d, while Kuwait lost more than 70% of production.The two countries were the worst hit by the closure of the crucial waterways for the lack of any alternate route to export oil and gas, according to multiple reports.WoodMac's satellite data showed producers first drained storage before output declined. Iran's Kharg Island had about nine days of usable storage on May 1, while Kuwait and Iraq continued loading cargoes before inventories climbed, Wood Mackenzie said.Western Canada quickly filled part of the supply gap as the Trans Mountain Expansion pipeline moved a record 832,000 b/d in April at 93.5% utilization. Westridge terminal loaded 500,000 b/d, with 87% heading to Asia-Pacific.South Korea committed to import 33 million barrels of Canadian crude in May under the Canada-Korea Free Trade Agreement, sharply higher than about 4.5 mmbbls during all of 2025, the note said.Wood Mackenzie expects Canadian oil sands production to reach 3.61 mmbbl/d in 2026 and 3.82 mmbbl/d in 2027. Planned pipeline expansions could add 90,000 b/d in 2027, 150,000 b/d in 2028 and 250,000 b/d in 2029, according to the note.California entered the disruption with refinery closures already removing about 167,000 b/d of gasoline production. State-wide output totaled 682,000 b/d against demand of 857,000 b/d, creating a 175,000-barrel deficit, Wood Mackenzie said.Regional demand from Las Vegas and Reno in Nevada, and Phoenix and Tucson in Arizona lifted California's effective gasoline shortfall to about 329,000 b/d. Higher imports kept supplies flowing as freight from Asia climbed to about $14 per barrel.Three pipeline projects, backed by HF Sinclair (DINO), ONEOK (OKE), Phillips 66 (PSX), and Kinder Morgan (KMI) are competing to reduce California's fuel transport costs, but Wood Mackenzie said each must compete with shipping costs that could ease toward $5 per barrel after the Strait of Hormuz reopens.California consumes 857,000 b/d of gasoline, while Japan uses 720,000 b/d despite having 123 million people and 78.7 million registered vehicles. Both markets now compete for supplies from South Korea, China, India and Washington State, the note said.Europe entered the crisis with about 1.8 mmbbl/d of refinery maintenance already offline. Refineries increased utilization and maximized jet fuel output, but inventories still lagged seasonal norms, Wood Mackenzie said.Wood Mackenzie said weaker Indian gas oil exports, down 42%, alongside Russian refinery outages near 1.8 million b/d, could complicate Europe's winter diesel and jet fuel stock rebuild if disruptions persist beyond August.Asia-Pacific crude imports dropped 23% from pre-conflict levels in April. China's Middle East arrivals fell 77%, Japan's imports declined 76%, Korean refinery utilization dropped from 94% to 72%, while China's and India's gas oil exports fell 73% and 42%, respectively.Japan holds about 200 days of strategic petroleum reserve coverage, while India's commercial and government reserves cover roughly 74 days.Australia also pursued regional energy supply agreements with Singapore, Malaysia and Indonesia, Wood Mackenzie said.The US extended its Jones Act waiver through Aug. 16, allowing nearly 4 mmbbls of refined products to reach California. Meanwhile, Venezuela resumed shipping 550,000 b/d to Houston and Pascagoula, while Cushing inventories fell to 21-week lows.Wood Mackenzie said production cuts, inventory movements and freight costs revealed supply tightness before prices reflected the full impact. The report said physical market data consistently moved ahead of headline announcements across regions.

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Wire

RBC Highlights Preferred Midstream Names as Earnings Season Approaches

BP's midstream benchmark fell 1.6% over the week ended June 11, but still delivered a 16.4% gain so far this year, outperforming the S&P 500's 8.0% advance, RBC Capital Markets said Friday.The sector also outperformed utilities by 1,314 basis points and real estate investment trusts by 160 basis points this year, although it lagged oilfield services by 3,319 basis points and exploration and production companies by 1,306 basis points, RBC said.Commodity prices weakened during the week, with front-month West Texas Intermediate crude dropping about 6% to roughly $88 per barrel and Henry Hub natural gas falling about 7.5% to $3.09 per million British thermal units, according to RBC.Archrock (AROC) led performance among RBC-covered companies with a 3.7% gain, supported by continued strength in the compression market, while Sunoco (SUN) fell 4.4% as investors likely locked in profits, the firm said.C-corporations gained 0.1%, outperforming master limited partnerships, which declined 1.6%.RBC estimates its coverage universe trades at an average 2027 enterprise value-to-adjusted EBITDA multiple of 10.0x and expects midstream stocks to remain sensitive to Iran-related developments that influence commodity prices.The firm said companies with greater perceived commodity exposure, including Targa Resources (TRGP), ONEOK (OKE), and Kinetik Holdings (KNTK), as well as liquefied natural gas-focused names such as Venture Global (VG) and Cheniere Energy (LNG), could react most sharply to geopolitical headlines.Kinder Morgan will kick off the second-quarter earnings season for RBC's coverage universe on July 22. RBC expects management to discuss geopolitical and macroeconomic conditions, stronger export activity, commodity-price support, and growth opportunities across its project pipeline.Among its preferred investments, RBC highlighted Cheniere Energy, citing 95% contracted cash flows through 2035, a $10 billion share repurchase program, and a target to increase dividends by 10% annually through 2030.RBC said Sunoco can build on operational momentum through 2027, benefiting from stronger refining margins at Burnaby, synergies from the Parkland acquisition, and an additional $500 million bolt-on acquisition strategy.The firm also favors Targa Resources, citing customer-backed expansion projects, exposure to leading Permian Basin acreage, and rising gas-to-oil ratios that could support natural gas growth even if crude production levels off.For Williams Companies (WMB), RBC sees growing electricity demand and natural gas consumption creating opportunities for high-return projects tied to Transco expansions and power-related infrastructure through 2030 and beyond.Williams is targeting adjusted EBITDA compound annual growth of more than 10% through 2030, including roughly 9% growth from Haynesville-related projects, while maintaining a balance sheet capable of supporting further expansion, RBC said.Price: $36.67, Change: $+0.59, Percent Change: +1.65%

$AROC$KMI$KNTK$LNG$OKE$SUN$TRGP$VG$WMB
Equities

S&P 500 Posts Monthly Gain to New High, Ninth Straight Weekly Rise

The Standard & Poor's 500 index rose 1.4% this week, marking its ninth consecutive weekly increase and ending the trading month with a 5.15% climb to a record closing high.The S&P 500 ended the week at 7,580.06, its highest close ever. The index also posted a record intraday high on Friday at 7,599.38.The last time the S&P 500 had a weekly winning streak this long was in late 2023. It is now up 11% this year.Friday marked the final trading day of May, a month of consistent weekly gains that followed a 10% jump in April as investors' worries about the war in Iran waned. On Friday, hopes for a peace deal increased as President Donald Trump said on Truth Social that he was meeting in the Situation Room to make a final determination on a memorandum of understanding between the US and Iran.Economic data this week showed the US economy expanded at a slower rate in the first quarter than previously estimated as consumer spending growth decelerated, according to the second estimate by the Bureau of Economic Analysis. Real gross domestic product increased at a 1.6% annualized rate in the March quarter, the report said, down from a 2% increase reported in the initial estimate.The advance this week wasn't broad; only four of the S&P 500's 11 sectors rose, led heavily by a 4.6% jump in the technology sector. The consumer discretionary rose 1.5%, materials added 1.2% and industrials edged up 0.8%.Dell Technologies (DELL) was the best performer in the technology sector, with its stock soaring 43% on the week as the company reported record fiscal first-quarter results that surpassed Wall Street's estimates amid a surge in demand for artificial intelligence-optimized servers. Dell also boosted its fiscal 2027 outlook.Super Micro Computer's (SMCI) stock also boosted the technology sector, with its stock surging 30% as the company said it is collaborating with Taiwanese authorities to prevent illicit diversion of its servers into the restricted Chinese market.AppLovin (APP) was also strong, with its stock jumping 27% as the company reported Q1 earnings per share and revenue above year-earlier results and analysts' mean estimates. AppLovin also forecast Q2 revenue above the Street view.In addition, NetApp (NTAP) shares climbed 25% as the company posted fiscal Q4 adjusted earnings per share and revenue above year-earlier results and analysts' expectations. NetApp also issued fiscal 2027 guidance above Street consensus views.Best Buy (BBY) led the week's gains in consumer discretionary, with its stock leaping 26%. The electronics retailer's fiscal first-quarter results came in stronger than expected and Chief Financial Officer Matt Bilunas said its comparable sales "have started strong in May, with month-to-date growth up high single digits." It has been years since Best Buy generated a high-single-digit increase in comparable sales even for a couple-week period, Truist Securities said in a note.On the downside, the energy sector fell 5.4% on the week, followed by a 3.2% drop in consumer staples, a 2.1% decline in utilities and a 1.4% slip in real estate. Financials, health care and communication services also edged lower.The energy sector's drop came as crude oil futures also fell on the week amid chatter about the US and Iran nearing a peace deal. Hardest-hit stocks included shares of ONEOK (OKE), down 11%, and Williams (WMB), down 9%.Next week, earnings reports are expected from companies including Palo Alto Networks (PANW), Broadcom (AVGO), CrowdStrike Holdings (CRWD) and Medtronic (MDT).In economic data, all eyes will be on the government's May employment report due Friday. Other reports expected next week include April construction spending and factory orders.

Dow JonesNasdaq CompositeS&P 500$APP$BBY$DELL$NTAP$OKE$SMCI$WMB
Wire

BofA Securities Adjusts Price Target on ONEOK to $96 From $94

ONEOK (OKE) has an average rating of overweight and mean price target of $95.25, according to analysts polled by FactSet.Price: $89.27, Change: $+1.06, Percent Change: +1.20%

$OKE

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