Surprise build in US crude stockpiles drag oil prices lower

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.

  • Rising inventories and threats of additional supply pulled oil prices lower today, with WTI declining 3% and Brent falling a more modest 1.7%.

  • 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%.

  • Energy followed broader markets lower, with the TSX energy sector falling 1.5%, while S&P 500 energy declined 0.7%. Most energy components ended the day lower on both Canadian and US markets. 

  • Lower oil prices and a stronger US dollar also pulled European ADRs lower today.

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.

OIL PRICES - DAILY % CHANGE
WTI DIFFERENTIALS
STREAM CLOSE %CHG L 52WK H
BRENT$80.05▼1.755.62
 
86.29
WTI$69.75▼3.049.29
 
76.41
CDN LT$44.75▼0.643.17
 
69.32
C5+$59.50▼7.151.08
 
71.40
WCS$26.20▼0.925.80
 
56.21
CRUDE OIL FUTURES CURVES
BRENT
WTI
█ OCT 17   █ OCT 10   █ OCT 3   █ SEP 26   (USD/BBL)
MARKET OVERVIEW
MARKETS
CURRENCIES & YIELDS
    TSX SECTORS
52-WK
    SPX SECTORS
52-WK
ENERGY SECTORS

TSX ENERGY SUB-SECTORS

SPX ENERGY SUB-SECTORS
TSX ENERGY STOCKS
TSX BULLISH INDICATORS
TOP 5
  • Gibson Energy (GEI +0.9%)
  • TransCanada (TRP +0.9%)
  • MEG Energy (MEG +0.8%)
  • PrairieSky (PSK +0.2%)
  • Pembina Pipeline (PPL +0.1%)
  • 12-MO HIGHS
  • Gibson Energy (GEI +0.9%)
  • 10-YR HIGHS
  • None
  • GOLDEN CROSSES
  • None
  • TSX BEARISH INDICATORS
    BOTTOM
    5
  • Enerplus (ERF -5.1%)
  • Ensign Energy Services (ESI -3.9%)
  • Baytex Energy (BTE -3.9%)
  • Crescent Point (CPG -3.8%)
  • ARC Resources (ARX -3.8%)
  • 12-MO LOWS
  • Baytex Energy (BTE -3.9%)
  • CES Energy Solutions (CEU -1.6%)
  • Whitecap Resources (WCP -2.3%)
  • 10-YR LOWS
  • None
  • DEATH CROSSES
  • None
  • COMPANY TICKER CLOSE %CHG L 52WK H RANK  CHARTS
    INTEGRATED
    SuncorSU47.17▼-1.040.49
     
    55.4732D   W
    Imperial OilIMO43.96▼-0.133.43
     
    44.9194D   W
    Husky EnergyHSE19.83▼-2.815.09
     
    22.9947D   W
    MIDSTREAM
    EnbridgeENB42.20▼-2.437.36
     
    52.0952D   W
    TransCanadaTRP52.39▲0.950.28
     
    65.1836D   W
    Pembina PipelinePPL44.68▲0.137.60
     
    47.8487D   W
    Inter PipelineIPL22.16▲0.121.36
     
    27.9230D   W
    Keyera KEY35.25▼-1.331.20
     
    39.3166D   W
    Gibson EnergyGEI22.99▲0.915.68
     
    23.0098D   W
    LARGE CAP E&P
    Cdn Natural ResCNQ37.31▼-1.736.88
     
    49.0811D   W
    EncanaECA14.64▼-0.312.37
     
    18.5417D   W
    Cenovus EnergyCVE11.29▼-0.99.03
     
    14.8418D   W
    TourmalineTOU20.09▼-1.717.78
     
    27.2614D   W
    Seven GenerationsVII14.98▼-2.213.62
     
    21.2524D   W
    SERVICES
    ShawcorSCL23.95▼-0.323.22
     
    29.5023D   W
    Pason SystemsPSI20.16▼-1.416.05
     
    22.1088D   W
    Mullen Group MTL15.12▼-0.314.10
     
    17.1258D   W
    EnerflexEFX16.55▼-1.413.55
     
    18.3689D   W
    Secure EnergySES7.98▼-0.66.98
     
    9.8254D   W
    REFINING & MARKETING
    Parkland FuelPKI46.50▼-1.023.41
     
    47.4598D   W
    S&P 500 ENERGY STOCKS
    SPX BULLISH INDICATORS
    TOP 5
  • Exxon Mobil (XOM +0.4%)
  • Kinder Morgan (KMI +0.2%)
  • 12-MO HIGHS
  • None
  • 10-YR HIGHS
  • None
  • GOLDEN CROSSES
  • None
  • SPX BEARISH INDICATORS
    BOTTOM
    5
  • Newfield Exploration (NFX -3.2%)
  • Devon Energy (DVN -2.9%)
  • Apache (APA -2.8%)
  • Valero Energy (VLO -2.1%)
  • Pioneer Natural Res (PXD -2%)
  • 12-MO LOWS
  • None
  • 10-YR LOWS
  • None
  • DEATH CROSSES
  • None
  • COMPANY TICKER CLOSE %CHG L 52WK H RANK  CHARTS
    INTEGRATED
    Exxon MobilXOM81.50▲0.472.16
     
    89.3055D   W
    ChevronCVX117.29▼-0.2108.02
     
    133.8841D   W
    MIDSTREAM
    Kinder MorganKMI17.95▲0.214.69
     
    19.8373D   W
    Williams CoWMB26.88▼-0.224.00
     
    33.6751D   W
    ONEOKOKE67.02▼-0.749.65
     
    71.9977D   W
    LARGE CAP E&P
    ConocoPhillipsCOP72.48▼-1.948.97
     
    80.2475↓D   W
    EOG ResourcesEOG120.14▼-1.795.36
     
    133.5362↓D   W
    Occidental PetroleumOXY72.92▼-0.362.47
     
    87.6730D   W
    Anadarko PetroleumAPC67.05▼-1.846.75
     
    76.7064D   W
    Concho ResourcesCXO150.45▼-1.7123.63
     
    163.1160↓D   W
    SERVICES
    SchlumbergerSLB59.24▼-0.758.30
     
    80.3520D   W
    HalliburtonHAL39.56▼-1.335.75
     
    57.8614D   W
    National-Oilwell VarcoNOV41.87▼-1.831.47
     
    49.0858D   W
    TechnipFMCFTI29.75▼-1.724.53
     
    35.0033↓D   W
    Baker HughesBHGE30.79▼-0.225.53
     
    37.7626D   W
    REFINERS
    Phillips 66PSX108.78▼-1.089.14
     
    123.9750D   W
    Valero EnergyVLO103.74▼-2.175.84
     
    126.9835D   W
    Marathon PetroleumMPC79.15▼-1.255.73
     
    88.4558D   W
    HollyFrontierHFC66.78▼-0.735.49
     
    83.2882D   W
    NYSE ADRs
    ADRs BULLISH INDICATORS
    12-MO HIGHS
  • None
  • 10-YR HIGHS
  • None
  • GOLDEN CROSSES
  • None
  • ADRs BEARISH INDICATORS
    12-MO LOWS
  • None
  • 10-YR LOWS
  • None
  • DEATH CROSSES
  • None
  • COMPANY TICKER CLOSE %CHG L 52WK H RANK  CHARTS
    Royal Dutch ShellRDS.A65.17▼-1.360.43
     
    73.8641↓D   W
    TotalTOT61.68▼-0.553.37
     
    65.6956D   W
    BPBP44.35▼-0.836.15
     
    47.8364D   W
    EniE35.94▼-2.031.58
     
    40.1541D   W
    EquinorEQNR27.05▼-1.219.74
     
    28.9376↓D   W
    ANALYST RATINGS

    UPGRADES

    • 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.

    DOWNGRADES

    • 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)

    SOURCES:
    • OIL PRICES REFLECT NEAR MONTH CONTRACT FROM THE NYMEX/CME GROUP
    • EQUITY PRICES PROVIDED BY NYSE & TMX GROUP
    • CHARTPACKS COURTESY STOCKCHARTS.COM (DIVIDEND ADJUSTED)

    NOTES:
    • 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

    RANK:
    • 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.
    Oil prices stumble as markets turn defensive

    Oil prices stumble as markets turn defensive

    Energy stocks move higher as equity markets continue relief rally

    Energy stocks move higher as equity markets continue relief rally

    0