Surprise build in US crude stockpiles drag oil prices lower
Today's energy market summary:
The Energy Information Administration reported a 6.5 million barrel build in commercial crude stockpiles, the fourth weekly increase and more than analysts were expecting. Refinery utilization in the Midwest, the largest buyers of Canadian crude, declined from 73% to just 70%.
The head of Russia's Gazprom Neft announced the expiry of the country's production pact with OPEC. Company executives say output is returning to 2016 record levels, before the country cut a deal with OPEC to cut output by 300,000 bbl/day.
Differentials on Canadian light and heavy crude narrowed slightly after yesterday's expiry of the November contract. Edmonton Condensate (C5+) was a notable exception, as the discount widened to over US$10 a barrel, sending C5+ tumbling by 7%.
Gasoline slid almost 3% today, despite a 2 million barrel drop in gasoline inventories last. Henry Hub natural gas prices bucked today's downtrend, rising 2.5%. Alberta’s AECO gas also rose almost 3%.
Today's other notable market movers:
MEG Energy's (MEG +0.8%) Board of Directors is asking shareholders to reject Husky Energy's (HSE -2.8%) $6.4 billion unsolicited bid, calling the offer significantly undervalued. MEG says it is at an "exciting inflection point" and has plans in place to accelerate cash flow generation. The company plans to open its data books in hopes of attracting a better offer.
ConocoPhillips (COP -1.8%) won regulatory approval for its US$1.5 billion Greater Mooses Tooth 2 project, located in Alaska's North Slope. The company plans to start construction this winter, with completion expected by 2021. The facility is expected to produce 40,000 bbl/day.
Exxon Mobil (XOM +0.4%) is in talks with municipal officials from Zhoushan, China, for the construction of a new US$7 billion ethylene facility. The petrochemical plant is expected to have a capacity of between 1.5 to 1.8 million t/y, and will be in addition to the 1.2 million t/y petrochemical complex already planned in Huizhou, China.
Matador Resources (MTDR -0.3%) announced another long-term natural gas gathering and processing agreement for its San Mateo joint-venture in New Mexico. The company says it has now secured enough contracts to fill over 80% of the capacity of its Black River cryogenic plant. Financial terms of this latest deal were not disclosed.
Royal Dutch Shell (RDS.A -1.3%) announced the divestiture of various Danish assets to Norwegian Energy Company (Noreco) for US$1.9 billion. The assets include 67,000 bbl/day of production and various pipeline infrastructure.
After dropping several hints earlier this week, Total (TOT -0.5%) formalized a deal with private Indian conglomerate Adani Group to jointly develop LNG import terminals and about 1,500 retail gas stations throughout India over the next 10 years.
Phillips 66 Partners (PSXP -1.8%) announced a 5.3% increase to its quarterly dividend, rising to US$0.752 a share in the third quarter.
Today's third quarter earnings releases:
Kinder Morgan Canada (KML -0.8%) reported a net income of $1.35 billion in the third quarter, thanks to a $1.31 billion proceed from the sale of its Trans Mountain assets to the Canadian government. The company will payout a one-time dividend of $11.40 per share, to be followed by a 1-for-3 share consolidation. Post-consolidation, quarterly dividends revert back to $0.1625 per share.
Third quarter revenues at parent-company Kinder Morgan (KMI +0.2%) increased to US$3.52 billion, up from US$3.28 billion for the same time last year. Net income to shareholders more than doubled to US$693 million, while cash flow rose 4% y/y to US$1.1 billion, excluding proceeds from KML's sale of its Trans Mountain assets.
|CURRENCIES & YIELDS|
|Imperial Oil||IMO||43.96||▼-0.1||33.43||44.91||94||D W|
|Husky Energy||HSE||19.83||▼-2.8||15.09||22.99||47||D W|
|Pembina Pipeline||PPL||44.68||▲0.1||37.60||47.84||87||D W|
|Inter Pipeline||IPL||22.16||▲0.1||21.36||27.92||30||D W|
|Gibson Energy||GEI||22.99||▲0.9||15.68||23.00||98||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||37.31||▼-1.7||36.88||49.08||11||D W|
|Cenovus Energy||CVE||11.29||▼-0.9||9.03||14.84||18||D W|
|Seven Generations||VII||14.98||▼-2.2||13.62||21.25||24||D W|
|Pason Systems||PSI||20.16||▼-1.4||16.05||22.10||88||D W|
|Mullen Group||MTL||15.12||▼-0.3||14.10||17.12||58||D W|
|Secure Energy||SES||7.98||▼-0.6||6.98||9.82||54||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||46.50||▼-1.0||23.41||47.45||98||D W|
|Exxon Mobil||XOM||81.50||▲0.4||72.16||89.30||55||D W|
|Kinder Morgan||KMI||17.95||▲0.2||14.69||19.83||73||D W|
|Williams Co||WMB||26.88||▼-0.2||24.00||33.67||51||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||120.14||▼-1.7||95.36||133.53||62↓||D W|
|Occidental Petroleum||OXY||72.92||▼-0.3||62.47||87.67||30||D W|
|Anadarko Petroleum||APC||67.05||▼-1.8||46.75||76.70||64||D W|
|Concho Resources||CXO||150.45||▼-1.7||123.63||163.11||60↓||D W|
|National-Oilwell Varco||NOV||41.87||▼-1.8||31.47||49.08||58||D W|
|Baker Hughes||BHGE||30.79||▼-0.2||25.53||37.76||26||D W|
|Phillips 66||PSX||108.78||▼-1.0||89.14||123.97||50||D W|
|Valero Energy||VLO||103.74||▼-2.1||75.84||126.98||35||D W|
|Marathon Petroleum||MPC||79.15||▼-1.2||55.73||88.45||58||D W|
Cimarex Energy (XEC): Upgraded from Market Perform to Outperform at Wolfe Research.
Ensco (ESV): Upgraded from Accumulate to Buy at Johnson Rice.
Marathon Oil (MRO): Upgraded from Market Perform to Outperform at Wolfe Research.
Oasis Petroleum (OAS): Upgraded from Market Perform to Outperform at Wolfe Research.
Transocean (RIG): Upgraded from Sell to Hold at Johnson Rice.
Williams Companies (WMB): Upgraded from Hold to Buy at US Capital Advisors.
Diamond Offshore Drilling (DO): Downgraded from Hold to Sell at Johnson Rice.
Parsley Energy (PE): Downgraded from Outperform to Market Perform at Wolfe Research.
Smart Sand (SND): Downgraded from Hold to Underperform at Jefferies.
UPDATED: DAILY (END-OF-DAY)
• OIL PRICES REFLECT NEAR MONTH CONTRACT FROM THE NYMEX/CME GROUP
• EQUITY PRICES PROVIDED BY NYSE & TMX GROUP
• CHARTPACKS COURTESY STOCKCHARTS.COM (DIVIDEND ADJUSTED)
• OIL PRICES, FUTURES AND DIFFERENTIALS IN USD/BBL
• C5+ = EDMONTON CONDENSATE
• FUTURES CURVES SHOW PRICES FOR NEAR-MONTH CONTRACT (C1) AND NEXT 5-MONTHS (C2-C6)
• TSX SHARE PRICES IN CAD; S&P 500 PRICES IN USD
• ADR: AMERICAN DEPOSITORY RECEIPTS LISTED ON NYSE IN USD
• SHARE PRICE CHANGES (INCL. NEW HIGHS & LOWS) EXCLUDE DIVIDENDS
• BASED ON STOCKCHARTS TECHNICAL RANK (SCTR)
• REFLECTS RELATIVE STRENGTH AMONG OTHER ENERGY STOCKS (PERCENTILE RANKING)
• RISING RANK (↑) REFLECTS INCREASING RELATIVE STRENGTH
• FALLING RANK (↓) REFLECTS DECREASING RELATIVE STRENGTH.