D.C. Democrats seek antitrust probe of big oil and gas mergers (NYSEARCA:USO)

Nearly 50 Democrats in the U.S. Congress on Wednesday called on the Federal Trade Commission to open a full investigation into the wave of M&A activity in the oil and gas company industry, arguing the consolidation could hurt competition and lead to higher prices.

The industry went on a $250B buying spree in 2023, including Exxon’s $60B purchase of Pioneer Natural Resources and Chevron’s $53B deal for Hess, and so far this year Chesapeake Energy agreed to acquire Southwestern Energy for $7.4B.

“It is now even clearer that there is an anticompetitive pattern developing as Big Oil corporations race to consolidate the Permian Basin and other key American oil fields, and the FTC must take this pattern into account as it assesses each individual transaction,” the lawmakers said in their message to FTC Chair Lina Khan.

Front-month Nymex crude (CL1:COM) for April delivery closed +1.2% to $79.13/bbl, its third highest settlement value this year, and front-month May Brent crude (CO1:COM) finished +1.1% to $82.96/bbl.

ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (NRGU), (USOI)

The U.S. Energy Information Administration reported signs of rising fuel demand heading into the summer driving season, with a smaller than forecast 1.4M bbl/day increase in domestic crude stockpiles during the week ended March 1, while distillate and gasoline inventories fell by much more than expected.

“The drawdown in gasoline and distillates has the market’s attention… a wake up call that we have a very tight market,” Price Futures Group analyst Phil Flynn said.

Also, a jump in the refinery utilization rate by 3.4 percentage points to 84.9% of capacity “signaled that the low point of turnaround season is in, and refiners are ramping up in a big way in anticipation of summer driving season,” Mizuho’s Robert Yawger said.

The data added to early gains driven by Saudi Arabia’s decision to raise prices to Asia and a rally in equities as Federal Reserve Chair Jerome Powell told Congress that rate cuts remain likely later this year.