Weak Chinese trade data weighs on energy commodities
Today's energy market summary:
- Weak Chinese import and export data in December dragged on equity markets and commodities on Monday.
- Brent crude declined 2.5%, falling below the key support level of US$60/bbl. WTI also ended the day 2% lower.
- Differentials on Canadian benchmarks were roughly unchanged for the day.
- WCS, Canadian Light and Edmonton Condensate declined about 2%.
- Wholesale gasoline prices followed Brent lower by 2.6%. Heating oil also fell 1.5%.
- Henry Hub natural gas prices shot up 16% on expectations of cold weather through the end of the month. Stockpiles remain 15% below the 5-year average, prompting some analysts to predict gas prices may top US$4/MMBtu sometime in February.
- The S&P 500 declined 0.5%, including a 0.2% dip in the energy sector.
- The TSX inched up 0.2%, including a 0.2% increase in energy stocks.
Today's notable energy news:
- Surge Energy (SGY.TO -1.4%) cut its 2019 capital budget from $160 million to $135 million, due to "recent extreme volatility" in both WTI and Canadian crude differentials. The company expects to produce an average of 22,000 boe/day this year, up 20% from 2018.
- Phillips 66 Partners (PSXP -0.7%), Harvest Midstream, and PBF Logistics (PBFX -0.3%) have agreed to jointly develop the ACE Pipeline System, transporting crude from St. James hub in Louisiana, to refineries near New Orleans. The pipeline will have an initial capacity of 400,000 bbl/day and is expected to be in service by the end of 2020.
- A US appeals court has rejected a bid by Dominion Energy (D -2.7%) to continue construction on its 600-mile Atlantic Coast Pipeline, which would transport 1.5 Bcf/day of gas from the Utica and Marcellus fields into mid-Atlantic states. Construction was halted in December when the courts pulled a US Fish and Wildlife permit. Dominion says it remains confident the project will eventually be completed. Atlantic Coast is jointly held with Duke Energy (DUK -1.1%) and Southern Company Gas (SO -1.0%).
- Exxon Mobil (XOM -0.1%) shut in the crude distillation unit (CDU) at its 560,500 bbl/day Baytown refinery in Texas, as part of a planned maintenance shutdown. The 280,000 bbl/day CDU until is expected to be offline for as long as two months. Exxon says this turnaround is "the largest maintenance and improvement program in the site’s history."
- Dutch pension fund PGGM and Royal Dutch Shell (RDS.A -0.2%) are considering a joint bid for Eneco, a renewable energy firm owned by a consortium of 53 municipalities. Eneco is worth an estimated US$3 billion, and will be sold via auction later this year.
- A Brazilian judge has overturned an injunction that prevented PetroBras (PBR +0.3%) from selling its assets. The oil major has been cleared to continue it US$27 billion divestiture program until the end of February, when the country's Supreme Court will hear its case.
- BP (BP +0.5%) and Italian oil major Eni (E -0.2%) announced an exploration and production sharing agreement with the government of Oman to jointly develop Block 77, located just east of the Khazzan gas project.
|CURRENCIES & YIELDS|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||36.28||▲0.6||30.11||49.08||D|
|REFINING & MARKETING|
|LARGE CAP E&P|
|Pioneer Natural Res||PXD||142.89||▲0.5||119.08||213.40||D|
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