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.
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.
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.
|CURRENCIES & YIELDS|
|Suncor Energy||SU||42.93||▲0.2||40.49||55.47||25||D W|
|Imperial Oil||IMO||38.09||▼-3.7||33.43||44.91||27||D W|
|Husky Energy||HSE||16.87||▲2.2||15.29||22.99||27||D W|
|Pembina Pipeline||PPL||45.17||▲0.8||37.60||47.84||84||D W|
|Inter Pipeline||IPL||21.26||▼-0.5||20.68||27.92||30||D W|
|Gibson Energy||GEI||19.74||▼-7.5||15.68||23.32||81||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||36.58||▲9.6||32.08||49.08||27||D W|
|Cenovus Energy||CVE||10.99||▲11.9||9.03||14.84||32||D W|
|Vermilion Energy||VET||33.50||▲1.3||30.55||50.46||18||D W|
|Pason Systems||PSI||19.76||▼-0.9||16.05||24.57||50||D W|
|Mullen Group||MTL||12.41||▲0.9||12.04||16.93||19||D W|
|Secure Energy||SES||7.15||▼-0.7||6.98||9.82||23↓||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||38.32||▼-2.1||25.12||47.45||93||D W|
|Exxon Mobil||XOM||81.22||▲2.2||72.16||89.30||55||D W|
|Kinder Morgan||KMI||17.30||▲1.4||14.69||19.83||59||D W|
|Williams Co||WMB||25.70||▲1.5||23.54||33.67||43||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||108.11||▲4.6||96.54||133.53||38||D W|
|Occidental Petro||OXY||71.32||▲1.5||62.47||87.67||23||D W|
|Anadarko Petro||APC||55.47||▲4.8||46.80||76.70||15||D W|
|Concho Res||CXO||134.74||▲3.4||123.63||163.11||48||D W|
|Ntl-Oilwell Varco||NOV||32.88||▲2.4||31.30||49.08||6||D W|
|Baker Hughes||BHGE||23.25||▲1.8||21.67||37.76||2||D W|
|Marathon Petro||MPC||64.66||▼-0.8||60.64||88.45||11||D W|
|Phillips 66||PSX||92.09||▼-1.5||88.99||123.97||9||D W|
|Valero Energy||VLO||81.30||▲1.7||76.25||126.98||3||D W|
Helmerich & Payne (HP): Upgraded from Underperform to Neutral at BofA.
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)
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