WCS returns to lows of early 2016 as differential widens
Today's energy market summary:
Oil prices staged a small recovery on Friday, gaining on average just under 1%. Western Canadian Select was a notable exception, falling another 2% to US$24.87/bbl, the lowest since the spring of 2016.
According to Baker Hughes, the US put another 4 oil rigs into service this week, bringing the total to 873, the highest since March 2015.
Markets tried to rally at Friday's open, but mostly fizzled by the end of the day. Sentiment remains decidedly defensive, as funds continue to rotate into staples and utilities.
On the TSX, the energy sector rose 0.7%, with most components ending the day higher.
Despite higher oil prices, the US energy sector sank 0.8%, dragged lower by a meltdown in refining stocks. The declines were likely precipitated by Valero Energy's (VLO -10.3%) US$950 million buyout of Valero Energy Partners (VLP +6.8%), announced yesterday after the close.
Today's other notable market movers:
Enbridge (ENB.TO +1.3%) says its ruptured 36 inch natural gas pipeline should be put back into service sometime in mid-November, at about 80% of normal pressure. Once all repairs are completed, the system's capacity should return to a range of between 0.9 to 1.3 Bcf/day through the winter heating season.
Marathon Petroleum (MPC -6.2%) is mulling the sale of E15 gasoline in Minnesota, which contains as much as 15% ethanol. Minnesota is the fourth-largest producer of ethanol, which is presently cheaper than gasoline. The Trump Administration recently allowed refiners to raise ethanol ratios, in a bid to lower gas prices. The use of 15% ethanol blends in the summer is currently banned by the EPA due to smog concerns.
A crude pipeline in Columbia owned by Gran Tierra (GTE.TO -2.5%) was attacked by an unidentified armed group, resulting in an oil spill and fire. The company says the fire has since been extinguished, but provided no guidance on production impacts, if any.
According to Bloomberg, ExxonMobil (XOM +0.2%) is in talks with Rosneft on new oil and gas projects in Russia, despite the possibility of additional sanctions from the Trump Administration. Talks are in reference to natural gas, refining, and chemicals projects, none of which are currently subject to US sanctions.
Today's third quarter earnings releases:
Schlumberger (SLB +0.7%) reported a US$644 million profit for Q3, up 18% y/y, on revenues of US$8.5 billion, up 7.5%. The company warned of "rapid softening" in hydraulic fracturing activity, noting that growth out of the Permian is slowing due to transportation bottlenecks. The slowdown will likely be reflected in Q4 results. SLB shares hit a 6-year low today.
|CURRENCIES & YIELDS|
|Imperial Oil||IMO||43.81||▲1.3||33.43||44.91||94||D W|
|Husky Energy||HSE||20.08||▲1.1||15.09||22.99||75||D W|
|Pembina Pipeline||PPL||44.83||▲1.6||37.60||47.84||90||D W|
|Inter Pipeline||IPL||22.49||▲2.5||21.36||27.92||44||D W|
|Gibson Energy||GEI||22.70||▼-0.8||15.68||23.04||98||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||37.17||▲0.3||36.47||49.08||11||D W|
|Cenovus Energy||CVE||11.15||▲0.3||9.03||14.84||20||D W|
|Seven Generations||VII||14.44||▲1.0||13.62||21.25||15||D W|
|Pason Systems||PSI||20.14||0.0||16.05||22.10||88||D W|
|Mullen Group||MTL||15.21||▲0.1||14.10||17.12||72||D W|
|Secure Energy||SES||7.98||▼-0.1||6.98||9.82||57||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||45.88||▼-0.7||23.41||47.45||98||D W|
|Exxon Mobil||XOM||81.97||▲0.1||72.16||89.30||65||D W|
|Kinder Morgan||KMI||17.98||▲0.2||14.69||19.83||79||D W|
|Williams Co||WMB||26.74||▲0.3||24.00||33.67||54||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||117.67||▼-0.7||95.36||133.53||58↓||D W|
|Occidental Petroleum||OXY||72.18||▲0.4||62.47||87.67||31||D W|
|Anadarko Petroleum||APC||66.00||▼-0.7||46.75||76.70||62||D W|
|Concho Resources||CXO||147.54||▼-0.2||123.63||163.11||60||D W|
|National-Oilwell Varco||NOV||40.40||▼-0.9||31.47||49.08||52↓||D W|
|Baker Hughes||BHGE||29.94||▼-1.7||25.53||37.76||22||D W|
|Phillips 66||PSX||102.77||▼-5.8||89.14||123.97||32||D W|
|Valero Energy||VLO||92.76||▼-10.3||75.84||126.98||11||D W|
|Marathon Petroleum||MPC||73.92||▼-6.3||55.87||88.45||33||D W|
Imperial Oil (IMO.TO): Upgraded from Sell to Buy at Goldman Sachs.
Marathon Oil (MRO): Upgraded from Neutral to Buy at Mizuho.
Murphy Oil (MUR): Upgraded from Underperform to Neutral at Mizuho.
Valero Energy (VLO): Downgraded from Neutral to Sell at Goldman Sachs.
Valero Energy Partners (VLP): Downgraded from Buy to Hold at SunTrust Banks and from Outperform to Sector Perform at RBC.
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.