OPEC comes to the rescue, giving a boost to oil markets
Today's energy market summary:
After waffling yesterday, OPEC and friends have agreed to remove 1.2 million bbl/day of crude from oil markets in the new year, as measured from October’s output. The cuts will be spilt 800,000 bbl/day for OPEC members and 400,000 bbl/day for non-OPEC producers, with Russia accounting for more than half of those volumes. This latest round of reductions will be in effect for six months.
The news helped boost oil prices, with both Brent and WTI recovering all of yesterday's losses. Brent gained 5% for the week, while WTI is up 3.3% from last Friday's close.
The differential on both WCS and Canadian Light narrowed by another US$1/bbl on Friday. The price of WCS rose over 8% to US$32.70 while Canadian Light gained another 5%, ending Friday at almost US$43/bbl. For the week, Canada's light and heavy benchmarks have each risen about 50%.
According to Baker Hughes, 10 oil rigs were taken out of service in the US this week, bringing the total to 877. Canada also lost 17 rigs, to a total of 102. In the natural gas space, 13 new rigs were put into service on both sides of the border this week.
Today's equity market action:
A general feeling of malaise continues to trouble North American equity markets, with most US markets once again posting big declines.
The Dow Jones Industrial (DJIA) sank another 560 points (-2.2%), while the broader S&P 500 declined 2.3%, returning to the lows of late October. The Dow Transports (-3.9%) and tech-heavy Nasdaq (-3.1%) were the worst performers.
The S&P 500 got the dreaded “death cross” on Friday. The DJIA is now the only US index whose short-term moving average (50-day) still sits above the long-term average (200-day).
Utilities stocks were the only gainers in US markets. Treasuries also posted gains, thanks to continued declines in bond yields.
In Toronto, the TSX slid another 1%, returning to the lows of late November.
The Canadian energy sector was the best performer on the TSX today, rising 1.1% thanks to big gains in heavy-weights Suncor Energy (SU.TO +2.0%), Husky Energy (HSE.TO +1.5%) and Canadian Natural Resources (CNQ.TO +2.7%). Canadian midstream stocks were the worst performers on Friday.
In other energy news:
Bellatrix Exploration (BXE.TO +2.7) says about 55% of its natural gas volumes are sold into the Dawn, Chicago and Malin markets, reducing its exposure to AECO prices. The company says it plans to release its 2019 capital budget and guidance sometime in January.
Norway's energy regulator has approved Equinor's (EQNR +0.8%) Troll Phase 3 development. The US$1 billion project is expected come online in the first half of 2021. Troll is Norway’s biggest gas producer, jointly owned by ConocoPhillips (COP -1.1%), Total (TOT -0.5%), Royal Dutch Shell (RDS.A +0.2%) and Norway's state-owned Petoro.
|CURRENCIES & YIELDS|
|Suncor Energy||SU||41.88||▲2.0||40.49||55.47||22||D W|
|Imperial Oil||IMO||37.46||▼-1.1||33.43||44.91||30||D W|
|Husky Energy||HSE||16.13||▲1.5||15.30||22.99||21||D W|
|Pembina Pipeline||PPL||43.26||▼-2.0||37.60||47.84||63||D W|
|Inter Pipeline||IPL||20.92||▼-2.5||20.68||27.92||30||D W|
|Gibson Energy||GEI||19.58||▲1.1||15.68||23.32||83||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||35.83||▲2.7||32.08||49.08||32||D W|
|Cenovus Energy||CVE||10.16||▼-0.7||9.03||14.84||19||D W|
|Vermilion Energy||VET||31.23||▼-1.7||30.55||50.46||13||D W|
|Pason Systems||PSI||19.20||▼-0.9||16.05||24.57||42||D W|
|Mullen Group||MTL||12.35||▼-0.1||12.04||16.93||21||D W|
|Secure Energy||SES||7.10||▲2.8||6.72||9.82||31||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||36.88||▼-0.7||25.13||47.45||84||D W|
|Exxon Mobil||XOM||77.64||▼-1.0||72.16||89.30||59||D W|
|Kinder Morgan||KMI||16.35||▼-0.7||14.69||19.83||55||D W|
|Williams Co||WMB||24.48||▼-0.2||23.54||33.67||43||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||103.61||▲1.5||96.54||133.53||42||D W|
|Occidental Petro||OXY||66.54||▼-0.3||62.47||87.67||25||D W|
|Anadarko Petro||APC||52.06||▲0.9||46.80||76.70||14||D W|
|Concho Res||CXO||122.41||▲1.3||117.74||163.11||33||D W|
|Ntl-Oilwell Varco||NOV||29.81||▼-1.5||29.73||49.08||6||D W|
|Baker Hughes||BHGE||21.66||▲0.9||21.05||37.76||2||D W|
|Marathon Petro||MPC||61.56||▼-3.1||60.64||88.45||19||D W|
|Phillips 66||PSX||90.35||▼-2.4||88.99||123.97||21||D W|
|Valero Energy||VLO||75.99||▼-3.6||75.55||126.98||5||D W|
EOG Resources (EOG): Upgraded from Neutral to Overweight at JP Morgan.
Helmerich & Payne (HP): Upgraded from Sell to Neutral at Seaport Global Securities.
Carrizo Oil & Gas (CRZO): Downgraded from Neutral to Underweight at JP Morgan.
Chesapeake (CHK): Downgraded from Neutral to Underweight at JP Morgan.
Devon Energy (DVN): Downgraded from Overweight to Neutral at JP Morgan.
Gulfport Energy (GPOR): Downgraded from Overweight to Neutral at JP Morgan.
Halcon Resources (HK): Downgraded from Neutral to Underweight at JP Morgan.
HighPoint Resources (HPR): Downgraded from Overweight to Neutral at JP Morgan.
Matador Resources (MTDR): Downgraded from Overweight to Neutral at JP Morgan.
Extraction Oil & Gas (XOG): Downgraded from Overweight to Underweight at JP Morgan.
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
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• 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
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• 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.