Oil prices recoup some of yesterday's losses on better-than-expected drawdowns in US stockpiles
Today's energy market summary:
After yesterday's sharp sell-off, Brent and WTI recovered about 2% on Wednesday, thanks to a better-than-expected US inventory report.
According to the US Energy Information Administration (EIA), total commercial crude stockpiles declined by 500,000 barrels, despite a 1 million barrel increase in Cushing.
The EIA also reported a 4.2 million barrel decline in distillate inventories and 1.8 million barrel increased in gasoline stockpiles. Gasoline prices rose 2% while heating oil gained 3%.
The differential on Canadian heavy crude narrowed by another US$0.60/bbl, ending Wednesday at US$16 and sending WCS prices up 5%.
According to the Libyan government, production out of the El Sharara oilfield is poised to restart, after being taken offline 10 days ago due to dispute with workers. The government has pledged about US$700 million to improve living conditions among workers. El Sharara and neighbouring fields produce about 400,000 bbl/day.
Today's equity market action:
After surging higher Wednesday morning, US equity markets nosedived after the Federal Reserves raised interest rates by 25 basis points to 2.5%.
The Fed also took a much less aggressive stance on future rate hikes, and cut its 2019 growth forecast from 2.5 to 2.3%. Two more rate hikes are expected in 2019. The news sent yields on 30-year notes back to 3% and 10-year yields back to the lows of last April.
The Dow Jones Industrial ended the day down another 350 points (-1.5%), closing at a new low for the year. The small cap Russell 2000 Index and Nasdaq were the worst performers, falling over 2%.
Today's notable energy news:
BP (BP -0.5%) has launched the sale of various US onshore assets recently purchased from Australia's BHP (BHP -0.6%). The assets, located in Oklahoma, Wyoming, East Texas and along the Colorado-New Mexico border, are estimated to be worth US$3 billion and generate US$700 million in cash flow annually.
Altus Midstream (ALTM -2.6%) has exercised an option to buy a 15% stake in the Gulf Coast Express pipeline, leaving operator Kinder Morgan (KMI +0.3%) with a 35% stake. DCP Midstream (DCP -0.9%) and Targa Resources (TRGP -0.1%) each retain a 25% stake in the project. The US$1.75 billion pipeline will transport up 2 Bcf/day of natural gas from the Permian Basin to the Texas Gulf Coast. The line is currently under construction and expected to begin service in October 2019.
Bloomberg is reporting that a group of investors, including Stonepeak Infrastructure Partners and Toronto's Brookfield Asset Management (BAM/A.TO -1.9%) is in talks to buy pipeline operator Tallgrass Energy (TGE +13.7%). Tallgrass has an estimated market cap of about US$6.5 billion.
A Brazilian court has moved to block Petrobras' (PBR -1.6%) planned sale of its upstream assets, casting doubt on its many other divestitures. The company had planned to divest another US$27 billion in assets over the next five years as part of its ongoing debt-reduction program. The lawsuit was filed by a worker’s union.
|CURRENCIES & YIELDS|
|Suncor Energy||SU||38.41||▼-1.5||38.10||55.47||19||D W|
|Imperial Oil||IMO||35.04||▼0.0||33.43||44.91||28||D W|
|Husky Energy||HSE||14.52||▼-2.2||14.44||22.99||16||D W|
|Pembina Pipeline||PPL||42.36||▼-1.1||37.60||47.84||64||D W|
|Inter Pipeline||IPL||19.80||▼-0.1||19.50||26.74||29||D W|
|Gibson Energy||GEI||18.48||▼-1.1||15.68||23.32||72||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||32.59||▼-1.2||32.08||49.08||23||D W|
|Cenovus Energy||CVE||9.39||▼-1.4||9.03||14.84||20||D W|
|Vermilion Energy||VET||28.84||▲6.8||26.90||50.46||13||D W|
|Pason Systems||PSI||18.21||▼-0.8||16.05||24.57||37||D W|
|Mullen Group||MTL||12.03||▲0.2||11.93||16.93||27||D W|
|Secure Energy||SES||6.72||▼-2.3||6.66||9.82||32↓||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||33.84||▼-1.2||26.34||47.45||59↓||D W|
|Exxon Mobil||XOM||70.78||▼-1.7||70.30||89.30||42||D W|
|Kinder Morgan||KMI||15.57||▲0.3||14.69||19.83||51||D W|
|Williams Co||WMB||22.32||▼-0.4||22.12||33.67||28||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||92.98||▼-1.1||92.30||133.53||23||D W|
|Occidental Petro||OXY||62.24||▼-1.4||61.52||87.67||24||D W|
|Anadarko Petro||APC||46.79||▼-0.7||46.49||76.70||9||D W|
|Concho Res||CXO||104.78||▼-0.1||103.06||163.11||12||D W|
|Ntl-Oilwell Varco||NOV||26.21||▼-0.9||25.88||49.08||3||D W|
|Baker Hughes||BHGE||21.04||▼-0.9||20.81||37.76||8||D W|
|Marathon Petro||MPC||58.63||▼-0.5||58.13||88.45||28||D W|
|Phillips 66||PSX||85.16||▲0.5||84.16||123.97||23||D W|
|Valero Energy||VLO||70.98||▼-0.1||70.24||126.98||7||D W|
Antero Resources (AR): Downgraded from Outperform to Underperform at Raymond James.
C&J Energy Services (CJ): Downgraded from Outperform to Neutral at Credit Suisse.
Core Laboratories (CLB): Downgraded from Outperform to Neutral at Credit Suisse.
FTS International (FTSI): Downgraded from Outperform to Neutral at Credit Suisse.
Laredo Petroleum (LPI): Outperform to Neutral at Credit Suisse.
Oasis Petroleum (OAS): Outperform to Neutral at Credit Suisse.
Patterson-UTI Energy (PTEN): Outperform to Neutral at Credit Suisse.
Rowan Companies (RDC): Outperform to Neutral at Credit Suisse.
Schlumberger (SLB): Outperform to Neutral at Credit Suisse.
Superior Energy Services (SPN): Outperform to Neutral at Credit Suisse.
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.