Oil prices power higher as US dollar slides and OPEC cuts production

Oil prices power higher as US dollar slides and OPEC cuts production

Today's energy market summary:

  • Oil prices increased across the board on Wednesday, rising for the eighth day in a row on falling US inventories, a softer US dollar and sharp drop in OPEC output.
  • Brent and WTI gained about 5%, breaking above US$60 and US$50, respectively, for the first time since mid-December.
  • Canadian benchmarks all rallied in sympathy. The discount on Canadian heavy fell below US$11/bbl for the first time since August 2017, boosting WCS by almost 8%. Canadian synthetic crude also returned to par with WTI.
  • The Energy Information Administration (EIA) reported a 1.7 million barrel drawdown in US crude stockpiles and record imports of Canadian crude, estimated at 3.8 million bbl/day during the first week of January.
  • Despite a 19 million barrel increase in US gasoline and distillate stockpiles last week, gasoline prices rose almost 5% while heating oil gained 3% for the day.
  • According to Platts, OPEC production declined 630,000 bbl/day to 32.43 million bbl/day in December, the lowest since last summer. Saudi Arabia says it plans to reduce output by another 100,000 bbl/day going into February.
  • Morgan Stanley cut its 2019 oil price forecasts by over 10%, with Brent now expected to average US$61 a barrel, and WTI forecasted at US$54.

In treasury and currency markets today:

  • Minutes from December's FOMC meeting showed hesitation among policymakers to raise US interest rates aggressively in 2019. The news sent the US dollar lower by 0.7%, returning to the lows of mid-October.
  • Higher oil prices and a strong employment report helped boost yields on longer duration US bonds, steeping the yield curve.
  • The Bank of Canada kept interest rates unchanged today at 1.75%. Governor Poloz says he expects the economy to return to more normal growth rates by October. The loonie ticked up 0.5%.

Today's equity market action:

  • Global equity markets rose again on Wednesday, with Chinese markets posting the biggest gains.
  • The S&P 500 rose 0.4% while the TSX rose 1.4%.
  • The TSX energy sector rose another 2% on Wednesday while the SPX energy sector increased 1.5%.
  • Gains were seen across all subsectors with most energy components ending the day in the positive.

Today's notable energy news:

  • TransCanada (TRP.TO +0.1%) announced plans to change its name to TC Energy, better reflecting its significant presence in the US and Mexico. The change is subject to shareholder approval.
  • Crew Energy (CR.TO +2.2%) says it averaged 22,400 boe/day in Q4, exiting the year at about 24,000 boe/day, weighted 70% gas. Annual production is estimated at 23,850 boe/day, in line with previous guidance. The company has set a 2019 capital budget of about $100 million, which should be funded through operating cash flow.
  • Canadian billionaire Seymour Schulich increased his stake in Pengrowth Energy (PGF.TO +6.2%) to 28.8%, or 160 million shares.
  • Chesapeake Energy (CHK +12.7%) says it averaged about 463,000 boe/day in the fourth quarter, with Q4 capital expenditures estimated at US$545 million. The company's recent divestitures and refinancing has taken US$2.6 billion of debt off its balance sheet.
  • TechnipFMC (FTI +2.6%) was awarded a "significant" contract to provide EPC services and installation for BP's (BP +0.8%) Atlantis Phase 3 expansion project in the Gulf of Mexico.
  • Royal Dutch Shell (RDS.A +1.2%) closed on its acquisition of Total's (TOT +2.2%) 26% stake in the Hazira LNG terminal and Hazira Port in India, boosting its ownership to 100%. Financial terms of the deal were not disclosed.
OIL PRICES - DAILY % CHANGE
WTI DIFFERENTIALS
STREAM CLOSE %CHG L 52WK H
BRENT$61.44▲4.650.47
 
86.29
WTI$52.36▲5.242.53
 
76.41
CDN LT$49.10▲6.120.83
 
69.32
C5+$50.20▲5.437.04
 
71.40
WCS$41.48▲7.712.59
 
56.21

CRUDE OIL FUTURES CURVES
BRENT
WTI
█ JAN 9   █ JAN 2   █ DEC 26   █ DEC 19   (USD/BBL)
MARKET OVERVIEW
MARKETS
CURRENCIES & YIELDS
    TSX SECTORS
52-WK
    SPX SECTORS
52-WK
ENERGY SECTORS

TSX ENERGY SUB-SECTORS

SPX ENERGY SUB-SECTORS
TSX ENERGY STOCKS
TSX BULLISH INDICATORS
TOP 5
  • Precision Drilling (PD +11.3%)
  • Trican Well Svc (TCW +7.8%)
  • Kelt Exploration (KEL +6.7%)
  • ARC Resources (ARX +6.6%)
  • Nuvista Energy (NVA +6.5%)
  • 12-MO HIGHS
  • None
  • 10-YR HIGHS
  • None
  • GOLDEN CROSSES
  • None
  • TSX BEARISH INDICATORS
    BOTTOM
    5
  • Freehold Royalties (FRU -0.1%)
  • Altagas (ALA -0.1%)
  • 12-MO LOWS
  • None
  • 10-YR LOWS
  • None
  • DEATH CROSSES
  • None
  • COMPANY TICKER CLOSE %CHG L 52WK H CHARTS
    INTEGRATED
    Suncor EnergySU40.56▲2.235.53
     
    55.47D   W
    Imperial OilIMO35.28▲0.233.43
     
    44.91D   W
    Husky EnergyHSE15.29▲2.813.33
     
    22.99D   W
    MIDSTREAM
    EnbridgeENB45.70▲0.737.36
     
    50.89D   W
    TransCanadaTRP52.84▲0.147.90
     
    61.53D   W
    Pembina PipelinePPL43.85▲2.037.60
     
    47.84D   W
    Inter PipelineIPL20.94▲2.918.60
     
    26.37D   W
    Keyera KEY27.50▲0.424.05
     
    38.91D   W
    Gibson EnergyGEI19.78▲0.215.68
     
    23.32D   W
    LARGE CAP E&P
    Cdn Natural ResCNQ35.09▲1.630.11
     
    49.08D   W
    Cenovus EnergyCVE10.72▲2.58.74
     
    14.84D   W
    EncanaECA8.55▲0.56.90
     
    18.54D   W
    TourmalineTOU17.87▲0.515.84
     
    26.19D   W
    Vermilion EnergyVET30.48▲2.026.67
     
    50.46D   W
    SERVICES
    Pason SystemsPSI19.15▲1.316.05
     
    24.57D   W
    EnerflexEFX16.99▲3.313.55
     
    18.72D   W
    Mullen Group MTL12.47▲0.511.39
     
    16.93D   W
    ShawcorSCL18.48▲1.815.11
     
    29.50D   W
    Secure EnergySES7.75▲3.86.25
     
    9.82D   W
    REFINING & MARKETING
    Parkland FuelPKI35.08▲1.326.73
     
    47.45D   W
    S&P 500 ENERGY STOCKS
    SPX BULLISH INDICATORS
    TOP 5
  • Apache (APA +5.1%)
  • Helmerich & Payne (HP +4.9%)
  • Noble Energy (NBL +4.3%)
  • Marathon Oil (MRO +3.9%)
  • EOG Resources (EOG +3.8%)
  • 12-MO HIGHS
  • None
  • 10-YR HIGHS
  • None
  • GOLDEN CROSSES
  • None
  • SPX BEARISH INDICATORS
    BOTTOM
    5
  • Cabot O&G (COG -2.3%)
  • EQT Corp (EQT -1.9%)
  • Baker Hughes (BHGE -0.2%)
  • Valero Energy (VLO -0.1%)
  • 12-MO LOWS
  • None
  • 10-YR LOWS
  • None
  • DEATH CROSSES
  • None
  • COMPANY TICKER CLOSE %CHG L 52WK H CHARTS
    INTEGRATED
    Exxon MobilXOM72.42▲0.564.65
     
    89.30D   W
    ChevronCVX113.27▲1.3100.22
     
    133.88D   W
    MIDSTREAM
    Kinder MorganKMI17.26▲0.714.62
     
    19.83D   W
    Williams CoWMB25.15▲1.120.36
     
    33.67D   W
    ONEOKOKE59.73▲1.550.26
     
    71.99D   W
    LARGE CAP E&P
    ConocoPhillipsCOP66.45▲3.350.18
     
    80.24D   W
    EOG ResourcesEOG99.19▲3.882.04
     
    133.53D   W
    Occidental PetroOXY65.78▲1.256.83
     
    87.67D   W
    Anadarko PetroAPC47.91▲1.240.40
     
    76.70D   W
    Pioneer Natural ResPXD145.81▲2.5119.08
     
    213.40D   W
    SERVICES
    SchlumbergerSLB41.24▲1.434.99
     
    80.35D   W
    HalliburtonHAL30.00▲2.724.70
     
    57.86D   W
    Baker HughesBHGE23.17▼-0.220.09
     
    37.76D   W
    Ntl-Oilwell VarcoNOV28.37▲1.524.27
     
    49.08D   W
    TechnipFMCFTI22.92▲2.618.20
     
    35.00D   W
    REFINERS
    Marathon PetroMPC64.22▲2.254.29
     
    88.45D   W
    Phillips 66PSX91.99▲0.778.44
     
    123.97D   W
    Valero EnergyVLO77.29▼-0.168.81
     
    126.98D   W
    HollyFrontierHFC52.95▲2.242.42
     
    83.28D   W
    NYSE ADRs
    ADRs BULLISH INDICATORS
    12-MO HIGHS
  • None
  • 10-YR HIGHS
  • None
  • GOLDEN CROSSES
  • None
  • ADRs BEARISH INDICATORS
    12-MO LOWS
  • None
  • 10-YR LOWS
  • None
  • DEATH CROSSES
  • None
  • COMPANY TICKER CLOSE %CHG L 52WK H CHARTS
    Royal Dutch ShellRDS.A60.96▲1.255.04
     
    73.86D   W
    TotalTOT55.38▲2.249.70
     
    65.69D   W
    BPBP40.36▲0.836.15
     
    47.83D   W
    EniE33.06▲1.929.75
     
    40.15D   W
    EquinorEQNR22.92▲1.519.95
     
    28.93D   W
    ANALYST RATINGS

    UPGRADES

    • Callon Petroleum (CPE): Upgraded from Equal Weight to Overweight at Capital One Financial.

    • Concho Resources (CXO): Upgraded from Equal Weight to Overweight at Morgan Stanley.

    • Diamond Offshore Drilling (DO): Upgraded from Sell to Hold at DNB Markets.

    • ENI (E): Upgraded from Hold to Buy at Berenberg Bank.

    • Ensco (ESV): Upgraded from Hold to Buy at DNB Markets.

    • Noble Energy (NBL): Upgraded from Equal Weight to Overweight at Morgan Stanley.

    • PBF Energy (PBF): Upgraded from Equal Weight to Overweight at Morgan Stanley.

    • PetroChina (PTR): Upgraded from Equal Weight to Overweight at Morgan Stanley.

    • Rowan Companies (RDC): Upgraded from Hold to Buy at DNB Markets.

    • Transocean (RIG): Upgraded from Hold to Buy at DNB Markets.

    • Targa Resources (TRGP): Upgraded from Neutral to Outperform at Credit Suisse.

    DOWNGRADES

    • Bonterra Energy (BNE.TO): Downgraded from Strong Buy to Outperform at Raymond James.

    • Delek US (DK): Downgraded from Overweight to Equal Weight at Morgan Stanley.

    • Laredo Petroleum (LPI): Downgraded from Overweight to Neutral at Piper Jaffray.

    • Marathon Oil (MRO): Downgraded from Overweight to Equal Weight at Capital One.

    • Nabors Industries (NBR): Downgraded from Positive to Neutral at Susquehanna Bancshares.

    • Oasis Petroleum (OAS): Downgraded from Overweight to Neutral at Piper Jaffray.

    • Penn Virgina (PVAC): Downgraded from Overweight to Equal Weight at Capital One.

    • RPC (RES): Downgraded from Neutral to Sell at Citigroup.

    LATEST ENERGY NEWS

    UPDATED: DAILY (END-OF-DAY)

    SOURCES:
    • OIL PRICES REFLECT NEAR MONTH CONTRACT FROM THE NYMEX/CME GROUP
    • EQUITY PRICES PROVIDED BY NYSE & TMX GROUP
    • CHARTPACKS COURTESY STOCKCHARTS.COM (DIVIDEND ADJUSTED)

    NOTES:
    • 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
    WCS discount to WTI heads towards US$10 a barrel

    WCS discount to WTI heads towards US$10 a barrel

    WCS triples from November lows as oil prices post seventh day of gains

    WCS triples from November lows as oil prices post seventh day of gains

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