Oil prices end Friday on a high note as China offers to buy billions in US exports
Today's energy market summary:
- Oil prices all moved higher today on news that China may consider ramping up purchases of US crude in order to narrow its trade gap with the Americans. China's trade surplus with the US currently sits at US$323 billion.
- Brent gained 2.5% while WTI rose over 3%. The Brent futures curve has moved from being slightly in contango to being almost perfectly flat over the next 6 months.
- Canadian Light rose almost 4% while WCS gained over 6%, as the heavy discount narrowed by US$0.75 per barrel.
- According to the International Energy Agency (IEA), world oil supply fell by 950,000 bbl/day in December, falling to 100.6 million bbl/day. Russian output hit a record 11.5 million bbl/day during the month. The IEA kept its 2019 oil demand growth forecast unchanged at 1.4 million bbl/day.
- According to Baker Hughes, the US took 21 oil rigs out of service this week, reducing the total to 852, the lowest since last May. Canada put 25 new oil rigs into service, to a total of 128.
Today's equity market action:
- Markets continued their relief rally on Friday, capping off its fourth consecutive week of gains. The Dow Jones Industrial surged over 300 points (+1.4%), led higher by transport stocks. Overnight, markets in Europe and Asia also posted sizeable gains.
- The broader S&P 500 gained 1.3% while the TSX rose 0.6%. Except for Canadian gold stocks, gains were seen across all sectors.
- The energy sectors rose 0.7% on the TSX and almost 2% on the S&P 500, with most components ending Friday higher.
- US bond yields all ticked higher on Friday, boosting the US dollar another 0.3% for the day and 0.8% for the week, the first weekly increase since early December.
Today's notable energy news:
- Moody's Investors Service called Husky Energy's failed takeover of MEG Energy "credit positive." The ratings agency says the acquisition would have weakened Husky's balance sheet and increase its exposure to the heavy oil discount.
- Australia's WorleyParsons was awarded another EPC contract with Encana for its Pipestone Processing Facility, located in Alberta's Montney region.
- China's CNOOC says it wants to double its proven oil and gas reserves by 2025 by investing heavily in exploration. CNOOC held an estimated 2.6 billion barrels of oil equivalent in reserves at the end of 2017.
Today's Q4/2018 earnings:
- Schlumberger reported a net income of US$538 million in Q4/2018, versus versus a US$2.3 billion loss in the previous year. Full year revenues rose 8% to US$32.8 billion, with growth being driven primarily by its North American operations. This year's capital spending program is forecasted at US$1.5 to US$1.7 billion, down from US$2.2 billion in 2018.
|CURRENCIES & YIELDS|
|Suncor Energy||SU||42.49||▲2.3||35.53||55.47||D W|
|Imperial Oil||IMO||37.21||▲0.7||33.43||44.91||D W|
|Husky Energy||HSE||16.70||▼-4.3||13.33||22.99||D W|
|Pembina Pipeline||PPL||45.33||▲0.9||37.60||47.84||D W|
|Inter Pipeline||IPL||21.58||▲2.1||18.60||25.88||D W|
|Gibson Energy||GEI||20.00||▲0.4||15.68||23.32||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||36.51||▲0.3||30.11||49.08||D W|
|Cenovus Energy||CVE||10.79||▲0.9||8.74||14.84||D W|
|Vermilion Energy||VET||32.67||▼-1.0||26.67||50.46||D W|
|Pason Systems||PSI||21.18||▲0.8||16.05||24.57||D W|
|Mullen Group||MTL||12.82||▼-0.6||11.39||16.93||D W|
|Secure Energy||SES||8.06||▼-0.7||6.25||9.82||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||37.05||▲0.7||27.36||47.45||D W|
|Exxon Mobil||XOM||72.99||▲1.2||64.65||89.30||D W|
|Kinder Morgan||KMI||18.01||▲1.6||14.62||19.71||D W|
|Williams Co||WMB||26.40||▲0.9||20.36||33.67||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||101.05||▲2.0||82.04||133.53||D W|
|Occidental Petro||OXY||67.03||▲1.8||56.83||87.67||D W|
|Anadarko Petro||APC||48.67||▲1.3||40.40||76.70||D W|
|Pioneer Natural Res||PXD||144.90||▲1.1||119.08||213.40||D W|
|Baker Hughes||BHGE||24.12||▲1.9||20.09||37.76||D W|
|Ntl-Oilwell Varco||NOV||30.45||▲2.2||24.27||49.08||D W|
|Marathon Petro||MPC||66.09||▲0.5||54.29||88.45||D W|
|Phillips 66||PSX||95.30||▲2.0||78.44||123.97||D W|
|Valero Energy||VLO||82.59||▲2.6||68.81||126.98||D W|
Calfrac Well Services (CFW.TO): Upgraded from Outperform to Strong Buy at Raymond James.
Chevron (CVX): Upgraded from Neutral to Buy at UBS.
ENI (E): Upgraded from Underweight to Neutral at Citigroup.
Gulfport Energy (GPOR): Upgraded from Hold to Buy at Tudor Pickering.
MEG Energy (MEG.TO): Upgraded from Sector Perform to Outperform at RBC and from Tender to Hold at GMP Securities.
STEP energy Services (STEP): Upgraded from Outperform to Strong Buy at Raymond James.
Valero Energy (VLO): Upgraded from Neutral to Outperform at Macquarie.
Baytex Energy (BTE.TO): Downgraded from Outperform to Neutral at Macquarie.
Crescent Point Energy (CPG.TO): Downgraded from Outperform to Neutral at Macquarie.
Delek US (DK): Downgraded from Buy to Neutral at Citigroup.
Husky Energy (HSE.TO): Downgraded from Outperform to Perform at BMO.
UPDATED: DAILY (END-OF-DAY)
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