Brent prices deteriorate, following WTI to new 14-month low
Today's energy market summary:
Despite a decent showing in US equity markets, oil prices continued to weaken on Tuesday, along with most other energy commodities.
Brent decisively broke through all major supports on Tuesday, tumbling almost 6% and now returning to the lows of October 2017. WTI also declined over 7% on renewed concerns of rising US crude stockpiles.
According to the American Petroleum Institute (API), crude inventories are expected to have increased by 3.5 million barrels last week. Official data from the Energy Information Administration (EIA) is due Wednesday morning.
The Western Canadian Select (WCS) discount to WTI narrowed by US$1.25 to US$16.60/bbl, a level not seen since mid-May. Discounts for Canadian Light and Edmonton Condensate (C5+) were unchanged.
Today's equity market action:
Stock markets waffled on Tuesday, opening higher but selling off towards the end of the trading day. Markets anxiously await tomorrow's interest rate announcement from the US Federal Reserve.
The feds have repeatedly telegraphed intensions to raise rates, but may be forced to backtrack given the recent yield curve inversion and sharp sell-off in global equity markets. Most global bond yields declined again on Tuesday.
In Toronto, the TSX rose 0.4%, with heavy losses in energy stocks offsetting gains in most other sectors. The S&P 500 ended the day unchanged. Equity markets in Europe and Asia, including Japan, posted large declines overnight.
The US energy sector was the worst hit sector on Tuesday, declining 2.3% with almost all SPX large-cap energy components posting losses for the day. The TSX energy sector declined 1.1%, with E&Ps again leading to the downside.
Foreign ADRs listed on the NYSE also declined on Tuesday, with many falling to new 1-year lows.
Today's 2019 guidance updates:
Whitecap Resources (WCP.TO -6.8%) announced a 2019 capital budget of about $450 million, which includes plans to drill 220 new wells. The capex spend and dividend payouts are expected to be fully funded from operating cash flows. Full year 2019 output is expected to average about 71,000 boe/day. The company says it has now hedged about 40% of next year's crude production at an average price of $74/bbl.
Diamondback Energy (FANG -0.7%) announced a 2019 capital budget of US$2.7 to US$3.1 billion, with production guidance set at 275-290,000 boe/day, weighted about 70% liquids. The company also announced a 50% dividend increase, rising to US$0.75 per share annually starting in Q1/2019, subject to board approval.
Today's notable energy news:
Husky Energy (HSE.TO +0.6%) has received all regulatory approvals for its $6.4 billion takeover of MEG Energy (MEG.TO +1.3%). Husky calls its $11/share offer "full and fair." MEG has been shopping around for a better deal, but none has materialized so far. Husky's offer is open to acceptance until January 16.
Britain's Buzzard oilfield, located in the North Sea, finally restarted production after being offline for several weeks to repair a corroded pipe. Buzzard produces about 150,000 bbl/day, accounting for 13% of total UK production and 30% of flows in the Forties pipeline. The field is operated by Nexen Energy, a subsidiary of China's CNOOC (CEO -4.3%).
CNOOC also announced the signing of "Strategic Cooperation Agreements" for oil and gas exploration off the coast of China with 9 international oil companies, including Chevron (CVX -2.4%), ConocoPhillips (COP -1.9%), Equinor (EQNR -3.1%), Husky Energy (HSE.TO +0.6%), Royal Dutch Shell (RDS.A -1.2%), Total (TOT -2.4%), Kuwait's KUFPEC, Australia's Roc Oil and South Korea's SK Innovation.
|CURRENCIES & YIELDS|
|Suncor Energy||SU||38.98||▼-0.3||38.55||55.47||19||D W|
|Imperial Oil||IMO||35.05||▼-0.1||33.43||44.91||25||D W|
|Husky Energy||HSE||14.84||▲0.6||14.62||22.99||17||D W|
|Pembina Pipeline||PPL||42.85||▼-0.2||37.60||47.84||64||D W|
|Inter Pipeline||IPL||19.82||▲0.1||19.50||27.60||26||D W|
|Gibson Energy||GEI||18.69||▼-0.4||15.68||23.32||71||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||33.00||▼-0.5||32.08||49.08||22||D W|
|Cenovus Energy||CVE||9.52||▼-3.4||9.03||14.84||19||D W|
|Vermilion Energy||VET||27.01||▼-3.5||26.90||50.46||7||D W|
|Pason Systems||PSI||18.35||▼-1.3||16.05||24.57||37||D W|
|Mullen Group||MTL||12.01||▼-0.1||11.93||16.93||24||D W|
|Secure Energy||SES||6.88||▼-3.6||6.72||9.82||33↓||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||34.25||▲0.6||26.34||47.45||61||D W|
|Exxon Mobil||XOM||72.00||▼-2.8||71.62||89.30||45||D W|
|Kinder Morgan||KMI||15.53||▼-2.0||14.69||19.83||44||D W|
|Williams Co||WMB||22.42||▼-2.4||22.26||33.67||26||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||94.01||▼-2.3||93.71||133.53||21||D W|
|Occidental Petro||OXY||63.14||▼-1.5||62.47||87.67||22||D W|
|Anadarko Petro||APC||47.13||▼-4.9||47.05||76.70||7||D W|
|Concho Res||CXO||104.90||▼-4.5||104.36||163.11||8||D W|
|Ntl-Oilwell Varco||NOV||26.45||▲0.4||26.24||49.08||2||D W|
|Baker Hughes||BHGE||21.22||▼-1.9||20.81||37.76||6||D W|
|Marathon Petro||MPC||58.96||▲0.2||58.13||88.45||23||D W|
|Phillips 66||PSX||84.73||▼-1.3||84.29||123.97||17||D W|
|Valero Energy||VLO||71.06||▼-2.1||70.67||126.98||4||D W|
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.