WCS triples from November lows as oil prices post seventh day of gains
Today's energy market summary:
- Oil prices posted their seventh day of gains, thanks to an improved outlook for US/China trade relations and anticipated drawdowns in US crude stockpiles.
- Both Brent and WTI rose about 2.5%, while Canadian Light and Edmonton Condensate (C5+) gained almost 3%.
- Western Canadian Select (WCS) posted another 4% gain on Tuesday. WCS prices have now tripled from the lows of mid-November.
- The American Petroleum Institute (API) is forecasting a 6.3 million barrel drawdown in US crude oil inventories for the week ending January 4. Gasoline and distillate inventories are expected to post another 15 million barrel build, while crude stockpiles in Cushing are expected to show a small increase. Official numbers from the EIA are due to be released Wednesday morning.
Today's equity market action:
- Except for Chinese markets, most global indices posted gains on Tuesday. Small cap stocks and the Dow Transports were the most improved for the day, rising over 1.5%. The S&P 500 rose 1% while the TSX posted a 0.7% gain.
- Large cap producers, midstream and integrated stocks mostly posted gains on the TSX, offsetting losses among smaller producers. The TSX energy sector was roughly unchanged for the say.
- The SPX energy sector rose 0.8%. Except for Chevron (CVX -0.4%) and select refining stocks, gains were seen across most subsectors.
Today's notable energy news:
- Husky Energy (HSE.TO +1.8%) announced plans to find a buyer for its 12,000 bbl/day Prince George Refinery and over 500 Canadian retail and fuel distribution outlets. The company says it wants to focus on its core businesses and this divestiture is not contingent on its $6.4 billion takeover of MEG Energy (MEG.TO +2.3%).
- TransCanada (TRP +1.5%) says it hopes to start construction on Keystone XL by June. Under the current schedule, some pre-construction activities need to resume by February, allowing construction to begin in the summer, and be completed by the end of 2020. A hearing is scheduled for next week, but could be delayed due to the ongoing government shutdown.
- BP (BP -0.3%) has approved a US$1.3 billion expansion of the Atlantis field in the US Gulf of Mexico (GoM), thanks to the discovery of an additional 400 million barrels in the region. The UK oil major also announced two new discoveries in the region, and added another 1 billion barrels to its Thunder Horse reserves. BP says it expects to grow GoM output to about 400,000 bbl/day by 2025, up from the current 300,000 bbl/day. Atlantis is jointly owned with Australia's BHP (BHP -0.3%), who has yet to formally sanction the expansion.
- Teekay Offshore Partners (TOO +5%) reduced its quarterly dividend from $0.01 per share to zero, in an effort to "further strengthen its balance sheet."
|CURRENCIES & YIELDS|
|Suncor Energy||SU||39.70||▲0.5||35.53||55.47||D W|
|Imperial Oil||IMO||35.20||▲1.1||33.43||44.91||D W|
|Husky Energy||HSE||14.88||▲1.8||13.33||22.99||D W|
|Pembina Pipeline||PPL||43.01||▲1.5||37.60||47.84||D W|
|Inter Pipeline||IPL||20.35||▼-0.7||18.60||26.37||D W|
|Gibson Energy||GEI||19.75||▲0.1||15.68||23.32||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||34.53||▲0.2||30.11||49.08||D W|
|Cenovus Energy||CVE||10.46||▲1.2||8.74||14.84||D W|
|Vermilion Energy||VET||29.88||▼-2.7||26.67||50.46||D W|
|Pason Systems||PSI||18.91||▲2.0||16.05||24.57||D W|
|Mullen Group||MTL||12.41||▼-1.0||11.39||16.93||D W|
|Secure Energy||SES||7.47||▲1.8||6.25||9.82||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||34.62||▲0.9||26.70||47.45||D W|
|Exxon Mobil||XOM||72.04||▲0.7||64.65||89.30||D W|
|Kinder Morgan||KMI||17.14||▲3.4||14.62||19.83||D W|
|Williams Co||WMB||24.87||▲3.0||20.36||33.67||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||95.52||▲1.1||82.04||133.53||D W|
|Occidental Petro||OXY||64.99||▲0.8||56.83||87.67||D W|
|Anadarko Petro||APC||47.34||▲0.7||40.40||76.70||D W|
|Pioneer Natural Res||PXD||142.20||▼-0.1||119.08||213.40||D W|
|Baker Hughes||BHGE||23.21||▲2.9||20.09||37.76||D W|
|Ntl-Oilwell Varco||NOV||27.96||▲0.9||24.27||49.08||D W|
|Marathon Petro||MPC||62.87||▲1.0||54.29||88.45||D W|
|Phillips 66||PSX||91.39||▼-0.1||78.44||123.97||D W|
|Valero Energy||VLO||77.36||▲0.4||68.81||126.98||D W|
Targa Resources (TRGP): Upgraded from Neutral to Overweight at JPMorgan Chase.
Denbury Resources (DNR): Downgraded from Accumulate to Hold at Johnson Rice.
Devon Energy (DVN): Downgraded from Buy to Accumulate at Johnson Rice.
Freehold Royalities (FRU.TO): Downgraded from Outperform to Market Perform at BMO.
Oasis Petroleum (OAS): Downgraded from Hold to Buy at Stifel Nicolaus.
Paramount Resources (POU.TO): Downgraded from Outperform to Market Perform at BMO.
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
• C5+ = EDMONTON CONDENSATE
• 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
• ADR: AMERICAN DEPOSITORY RECEIPTS LISTED ON NYSE IN USD
• SHARE PRICE CHANGES (INCL. NEW HIGHS & LOWS) EXCLUDE DIVIDENDS