Canadian crude prices surge after Alberta government meddles with oil markets

Canadian crude prices surge after Alberta government meddles with oil markets

Today's energy market summary:

  • Canadian crude prices surged today after Alberta's NDP government ordered the province's oil producers to reduce output by 325,000 bbl/day, or roughly 9%. The cuts take effect in January but government officials were very short on details. The news was welcomed by producers in Saskatchewan and North Dakota, who now have more breathing space. 

  • The Canadian heavy oil discount narrowed by about US$7, boosting the price of WCS by almost 40%. The Canadian Light discount also narrowed by over US$4/bbl.

  • Hopes for less oversupply next year also helped boost Brent and WTI on Monday, each rebounding from last week's lows.

Today’s OPEC news:

  • OPEC produced 33.11 million bbl/day in November, down 160,000 bbl/day from the previous months. Most of those declines came out of Iran. Supply out of Saudi Arabia hit a record 11 million bbl/day. 

  • It remains to be seen if OPEC will deduct Alberta's lost barrels from their anticipated 1.3 million bbl/day reduction quota when they meet with Russia on Wednesday.

  • After being a member for 57 years, Qatar announced its exit from the cartel for "non-political" reasons. The country produces about 600,000 bbl/day.

Today's equity market action:

  • Global equity markets moved higher on Monday after the US and China agreed to a 90-day ceasefire on any new tariffs. Chinese markets gained about 2.5% overnight, while European markets rose about 1%.

  • US markets also gained ground on Monday, with the most indices rising about 1%. The Nasdaq was the best performer, gaining 1.5%. In Toronto, the TSX rose 0.5%.

  • Among energy names, the TSX energy sector shot up almost 4%, led higher by non-integrated producers such as Canadian Natural Resources (CNQ.TO +9.6%) and Cenovus Energy (CVE.TO +11.9%). Imperial Oil (IMO.TO -3.7%) and Gibson Energy (GEI.TO -7.5%) posted the largest declines.

  • The SPX energy sector rose 2.3%, with most subsectors ending the day higher. Refining stocks were the only losing subsector, despite a 2% increase in gasoline prices.

  • European ADRs also posted gains thanks to a softening of the US dollar.

Today's notable energy news:

  • Suncor Energy (SU.TO +0.2%) announced a "slow and controlled production restart" of its Terra Nova field off the coast of Newfoundland. The 150,000 bbl/day facility was shut down in mid-November due to a severe storm.

  • Inter Pipeline (IPL.TO -0.5%) announced a $1.46 billion capital program for 2019, including $1.1 billion allocated to the Heartland Petrochemical Complex, $100 million on conventional oil pipelines, $90 million on oil sands infrastructure and $120 million in sustaining capital.

  • Cenovus Energy (CVE.TO +11.99%) announced plans to invest about $1.5 billion next year, in line with its 2018 capital spending program. CEO Alex Pourbaix says the investment was made possible by the Alberta government's mandated production cuts.

  • Camp-space provider Civeo (CVEO +9.5%) was awarded an 18-month contract to provide accommodations for LNG Canada at its Sitka Lodge in Kitimat, BC. Civeo also terminated its joint venture with Bird Construction, and says it will outsource the manufacturing of of its camp modules, and close its plant in Alberta.

  • Black Diamond Group (BDI.TO +1.8%) says its "improved balance sheet" will allow the company to return to growth next year, allocating $35 million in capital for the full year. BDI says those funds will come from internal cash flow, with any extra money allocated toward debt reduction.

  • Kinder Morgan Canada (KML.TO +0.1%) warns the sale of its Trans Mountain assets earlier this year will cut its free cash flow to about $109 million next year. The company is still reviewing its options now that it has divested its largest asset, which may include selling the rest of its Canadian operations. 

  • Parent-company Kinder Morgan (KMI +1.4%) says it has a project backlog of about US$6.5 billion, and plans to invest US$3.1 billion in expansion projects next year. Distributable cash flow is expected to improve 10% to US$5 billion in 2019. KMI owns 70% of its Canadian subsidiary.

  • Murphy Oil (MUR +0.3%) closed on its new Gulf of Mexico JV with Petrobras (PBR +3.3%), adding about 60,000 boe/day of production. Fourth quarter guidance was raised to 176,000 boe/day, while its full-year 2018 forecast was boosted to 171,000 boe/day. Murphy's 2018 capital spending plans were also increased 4% to US$1.23 billion, reflecting more drilling planned for the Eagle Ford region.

  • ExxonMobil (XOM +2.2%) announced its 10th discovery in the Stabroek Block off the coast of Guyana, increasing its estimates of recoverable reserves to more than 5 billion barrels of oil equivalent, up 25% from its previous forecast.

OIL PRICES - DAILY % CHANGE
WTI DIFFERENTIALS
STREAM CLOSE %CHG L 52WK H
BRENT$61.69▲5.158.71
 
86.29
WTI$52.95▲4.050.29
 
76.41
CDN LT$34.10▲22.120.83
 
69.32
C5+$42.28▲9.437.04
 
71.40
WCS$31.37▲39.812.59
 
56.21
CRUDE OIL FUTURES CURVES
BRENT
WTI
█ DEC 3   █ NOV 26   █ NOV 19   █ NOV 12   (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
  • Cenovus Energy (CVE +11.9%)
  • Baytex Energy (BTE +10.2%)
  • Crescent Point (CPG +10.2%)
  • Tamarack Valley (TVE +9.6%)
  • Cdn Natural Res (CNQ +9.6%)
  • 12-MO HIGHS
  • None
  • 10-YR HIGHS
  • None
  • GOLDEN CROSSES
  • None
  • TSX BEARISH INDICATORS
    BOTTOM
    5
  • Gibson Energy (GEI -7.5%)
  • Imperial Oil (IMO -3.7%)
  • Parkland Fuel (PKI -2.1%)
  • CES Energy (CEU -1.3%)
  • PrairieSky (PSK -1.1%)
  • 12-MO LOWS
  • Advantage O&G (AAV +2.1%)
  • 10-YR LOWS
  • Advantage O&G (AAV +2.1%)
  • DEATH CROSSES
  • None
  • COMPANY TICKER CLOSE %CHG L 52WK H RANK  CHARTS
    INTEGRATED
    Suncor EnergySU42.93▲0.240.49
     
    55.4725D   W
    Imperial OilIMO38.09▼-3.733.43
     
    44.9127D   W
    Husky EnergyHSE16.87▲2.215.29
     
    22.9927D   W
    MIDSTREAM
    EnbridgeENB44.19▲1.237.36
     
    51.0491D   W
    TransCanadaTRP55.38▲1.748.92
     
    63.2987D   W
    Pembina PipelinePPL45.17▲0.837.60
     
    47.8484D   W
    Inter PipelineIPL21.26▼-0.520.68
     
    27.9230D   W
    Keyera KEY29.09▼0.027.85
     
    38.9118D   W
    Gibson EnergyGEI19.74▼-7.515.68
     
    23.3281D   W
    LARGE CAP E&P
    Cdn Natural ResCNQ36.58▲9.632.08
     
    49.0827D   W
    Cenovus EnergyCVE10.99▲11.99.03
     
    14.8432D   W
    EncanaECA9.41▲5.18.86
     
    18.543D   W
    TourmalineTOU18.90▲2.717.73
     
    26.1918D   W
    Vermilion EnergyVET33.50▲1.330.55
     
    50.4618D   W
    SERVICES
    Pason SystemsPSI19.76▼-0.916.05
     
    24.5750D   W
    EnerflexEFX16.61▲1.813.55
     
    18.7290D   W
    ShawcorSCL20.19▲3.418.72
     
    29.5013D   W
    Mullen Group MTL12.41▲0.912.04
     
    16.9319D   W
    Secure EnergySES7.15▼-0.76.98
     
    9.8223↓D   W
    REFINING & MARKETING
    Parkland FuelPKI38.32▼-2.125.12
     
    47.4593D   W
    S&P 500 ENERGY STOCKS
    SPX BULLISH INDICATORS
    TOP 5
  • Devon Energy (DVN +6.4%)
  • TechnipFMC (FTI +6.4%)
  • Noble Energy (NBL +5.3%)
  • Newfield Expl (NFX +5.2%)
  • Marathon Oil (MRO +5.2%)
  • 12-MO HIGHS
  • None
  • 10-YR HIGHS
  • None
  • GOLDEN CROSSES
  • None
  • SPX BEARISH INDICATORS
    BOTTOM
    5
  • HollyFrontier (HFC -5.8%)
  • Phillips 66 (PSX -1.5%)
  • Cabot O&G (COG -1%)
  • Marathon Petro (MPC -0.8%)
  • 12-MO LOWS
  • None
  • 10-YR LOWS
  • None
  • DEATH CROSSES
  • ONEOK (OKE +2.2%)
  • COMPANY TICKER CLOSE %CHG L 52WK H RANK  CHARTS
    INTEGRATED
    Exxon MobilXOM81.22▲2.272.16
     
    89.3055D   W
    ChevronCVX120.67▲1.5107.54
     
    133.8858D   W
    MIDSTREAM
    Kinder MorganKMI17.30▲1.414.69
     
    19.8359D   W
    Williams CoWMB25.70▲1.523.54
     
    33.6743D   W
    ONEOKOKE62.75▲2.251.28
     
    71.9941D   W
    LARGE CAP E&P
    ConocoPhillipsCOP69.11▲4.450.08
     
    80.2459D   W
    EOG ResourcesEOG108.11▲4.696.54
     
    133.5338D   W
    Occidental PetroOXY71.32▲1.562.47
     
    87.6723D   W
    Anadarko PetroAPC55.47▲4.846.80
     
    76.7015D   W
    Concho ResCXO134.74▲3.4123.63
     
    163.1148D   W
    SERVICES
    SchlumbergerSLB46.30▲2.744.68
     
    80.352D   W
    HalliburtonHAL32.66▲3.930.47
     
    57.863D   W
    Ntl-Oilwell VarcoNOV32.88▲2.431.30
     
    49.086D   W
    Baker HughesBHGE23.25▲1.821.67
     
    37.762D   W
    TechnipFMCFTI24.56▲6.422.39
     
    35.008D   W
    REFINERS
    Marathon PetroMPC64.66▼-0.860.64
     
    88.4511D   W
    Phillips 66PSX92.09▼-1.588.99
     
    123.979D   W
    Valero EnergyVLO81.30▲1.776.25
     
    126.983D   W
    HollyFrontierHFC58.85▼-5.842.42
     
    83.2810D   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.A61.84▲2.458.55
     
    73.8612D   W
    TotalTOT56.96▲2.453.37
     
    65.6935↑D   W
    BPBP41.19▲2.136.15
     
    47.8334D   W
    EniE33.21▲3.031.72
     
    40.1526D   W
    EquinorEQNR24.38▲4.319.91
     
    28.9335D   W
    ANALYST RATINGS

    UPGRADES

    • Helmerich & Payne (HP): Upgraded from Underperform to Neutral at BofA.

    DOWNGRADES

    • EQT GP (EQGP): Downgraded from Buy to Neutral at Citigroup.

    • EQM Midstream Partners (EQM): Downgraded from Buy to Hold at Stifel Nicolaus.

    • Pattern Energy Group (PEGI.TO): Downgraded from Buy to Hold at Industrial Alliance Securities.

    • Superior Energy Services (SPN): Downgraded from Neutral to Underperform at BofA.


    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.
    Inverted yield curve spooks global markets

    Inverted yield curve spooks global markets

    TSX energy stocks sink lower despite major improvement in Canadian crude discounts

    TSX energy stocks sink lower despite major improvement in Canadian crude discounts