Threats of sanctions against Venezuelan crude narrows discount on Canadian heavy
Today's energy market summary:
- Despite a major increase in US crude oil stockpiles, WTI gained 1% today as traders mull the potential impact of sanctions against Venezuela's crude exports.
- US refineries purchase about 400,000 bbl/day of mostly heavy crude, a majority imported into the US Gulf Coast. If imposed, the sanctions would dramatically boost demand for Canadian heavy crude. The heavy oil discount narrowed to below US$10 a barrel today, sending Western Canadian Select (WCS) higher by almost 3%.
- According to the Energy Information Administration, US imports of Canadian crude surged to a new record high of 4.1 million bbl/day last week, signalling very strong demand. Crude stockpiles rose 8 million barrels overall, the first significant increase in almost two months.
Today in treasury, currency and equity markets:
- Weak economic data out of Europe, the continued US government shutdown and concerns over China/US trade negotiations sent US bond yields lower today, particularly on the longer end of the curve. Canadian bond yields also declined.
- The US dollar jumped 0.6% on Thursday, returning to the highs of early January. The Euro and Aussie dollar declined 0.7%, while most other currencies were unchanged for the day.
- Equity markets continue to be very subdued, with the Dow Jones Industrial Average and NYSE ending Thursday roughly unchanged. The S&P 500 edged up 0.1%, while the TSX rose 0.5%.
- The TSX energy sector rose 1.5%, with gains seen across most subsectors. The SPX energy sector gained 0.6%, held back by weakness in refining stocks.
Today's notable energy news:
- BP announced an investment with PowerShare, developer of electric vehicle charging stations in China. According to BP, China is the world's largest market for electric vehicles.
- Talos Energy completed its first phase of exploration in the Zama block, located offshore Mexico. The company says work on Zama-2 was completed ahead of schedule and under-budget, revealing a reservoir "similar or better" to Zama-1. The block is jointly owned with Mexico's Sierra Oil and Gas and London-based Premier Oil.
- Calgary-based TransGlobe Energy announced a 4% decline in 2018 total proved plus probable (2P) reserves, falling to 44.1 million barrels of oil equivalent. Reserves rose in Egypt, while Canadian holdings in the Cardium declined due to low gas prices.
- Valero Energy boosted its quarterly dividend by US$0.10 to US$0.90 per share.
|CURRENCIES & YIELDS|
|Suncor Energy||SU||42.30||▲1.9||35.53||55.47||D W|
|Imperial Oil||IMO||36.65||▲0.4||33.43||44.91||D W|
|Husky Energy||HSE||15.79||▼-0.6||13.33||22.99||D W|
|Pembina Pipeline||PPL||44.21||▲0.7||37.60||47.84||D W|
|Inter Pipeline||IPL||20.95||▲1.3||18.60||25.70||D W|
|Gibson Energy||GEI||19.14||▼-0.7||15.68||23.32||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||34.96||▲2.1||30.11||49.08||D W|
|Cenovus Energy||CVE||10.17||▲0.5||8.74||14.84||D W|
|Vermilion Energy||VET||30.46||▼-0.9||26.67||50.25||D W|
|Pason Systems||PSI||20.69||▲0.2||16.05||24.57||D W|
|Mullen Group||MTL||12.18||0.0||11.39||16.93||D W|
|Secure Energy||SES||8.07||▲1.1||6.25||9.82||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||36.03||▼-1.5||27.36||47.45||D W|
|Exxon Mobil||XOM||71.40||▲0.1||64.65||89.30||D W|
|Kinder Morgan||KMI||17.48||▲1.4||14.62||19.56||D W|
|Williams Co||WMB||26.50||▲2.6||20.36||33.67||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||97.24||▲0.7||82.04||133.53||D W|
|Occidental Petro||OXY||64.98||▲0.6||56.83||87.67||D W|
|Anadarko Petro||APC||46.25||▲0.8||40.40||76.70||D W|
|Pioneer Natural Res||PXD||138.31||▲0.7||119.08||213.40||D W|
|Baker Hughes||BHGE||23.04||▲0.3||20.09||37.76||D W|
|Ntl-Oilwell Varco||NOV||29.38||▲2.2||24.27||49.08||D W|
|Marathon Petro||MPC||63.11||▼-2.7||54.29||88.45||D W|
|Phillips 66||PSX||91.33||▼-1.4||78.44||123.97||D W|
|Valero Energy||VLO||78.95||▼-1.0||68.81||126.98||D W|
Canadian Natural Resources (CNQ.TO): Upgraded from Hold to Buy at Tudor Pickering.
MEG Energy (MEG.TO): Upgraded to Buy at Tudor Pickering.
UPDATED: DAILY (END-OF-DAY)
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