Canadian heavy crude posts third day of losses, pulling TSX energy sector lower

Canadian heavy crude posts third day of losses, pulling TSX energy sector lower

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Today's energy market action:

  • After being little changed on both Monday and Tuesday, global benchmarks were once again little moved on Wednesday.

  • Brent edged up 0.1%, while WTI dipped 0.1%.

  • Western Canadian Select (WCS) dropped another 1%, as the heavy oil discount widened to US14.61 per barrel. This is the third consecutive day of declines for the Canadian heavy benchmark.

  • In contrast, Canadian Light rose 0.7%, as its differential to WTI narrowed to almost US$4 per barrel.

  • Synthetic Crude (SCO) also gained 0.8%, now priced just under par with WTI.

  • Both Henry Hub and AECO natural gas prices declined about 3% on Wednesday. Gasoline moved up 0.4%.

  • The Energy Information Administration (EIA) downgraded expectations for Brent and WTI prices by about 7% for the first quarter of next year, falling to US$58 and US$52.50 a barrel, respectively. Full year 2020 price forecasts were also revised lower, to about US$60 for Brent and US$54.40 for WTI.

Today's treasury, currency and equity market action:

  • Currency markets were also little moved on Wednesday. The US dollar was flat, the Euro gained 0.2%, the yen retreated 0.4%, while the loonie lost 0.1%. US bond yields moved up slightly on Wednesday, but the yield curve was unchanged.

  • After two days of declines, North American markets moved higher on Wednesday, with both the NYSE and NASDAQ gaining about 1% for the day. The S&P 500 also moved up almost 1%, with all sectors ending Wednesday in the green. Energy stocks rose about 1.1%, also notching its first gain this week. All energy sub-sectors gained ground, led by US refining stocks, which are benefiting from the widening heavy oil discount.

  • In Canada, the TSX gained 0.5%, but energy stocks slumped 0.4%, a fourth consecutive day of losses. Producers were the worst performing subsector, falling 0.7%, while midstream stocks bucked the downtrend, moving higher by about 1% for the day.

Today's supply/demand update:

  • According to the EIA, total US crude output touched a new record high of 12.6 million bbl/day last week. Averaged over the past four weeks, net crude imports touched a record low of 3.38 million bbl/day. 

  • The EIA also adjusted its 2019 US production forecast to an average of 12.3 million bbl/day this year, rising to 13.2 million bbl/day in 2020. OPEC output is expected to dip from 29.8 million bbl/day this year, to 29.6 million bbl/day in 2020.

  • OPEC has reportedly adjusted Nigeria's production quota slightly higher, allowing the country to raise output from 1.685 million bbl/day to 1.774 million bbl/day. Venezuela is also making progress on boosting its oil exports despite US sanctions, with more shipments planned to India on behalf of refiner Reliance Industries.

  • Kristalina Georgieva, the IMF's new Managing Director, warned that the global economy is now in a "synchronized slowdown," due to trade disputes. Georgieva says global trade growth has "come to a near standstill." The IMF will release its World Economic Outlook next week, which will show a downward revision for both 2019 and 2020.

Today's other notable energy news:

  • Alberta's UCP government has introduced Bill 14, the Alberta Indigenous Opportunities Corporation Act. The act would see the creation of a new crown corporation, which would oversee $1 billion in loan guarantees to First Nations groups who wish to take a stake in natural resources or infrastructure projects. The government aims to have the program up and running by next spring.

  • Toronto-based Just Energy announced the sale of its UK operations to a subsidiary of Royal Dutch Shell for about $17 million. Net proceeds will be used to deleverage the company's balance sheet, allowing it to focus on "higher-margin" North American operations. The company also says it identified another $20 million in annualized cost savings through its "ongoing optimization efforts." A strategic review, launched in early June, is also progressing.

  • ExxonMobil announced a US$500 million investment in its US$30 billion Rovuma LNG project in Mozambique, delaying a final investment decision to sometime in 2020. The funds were earmarked for midstream and upstream activities. An EPC contract for onshore facilities was awarded to a consortium led by Japan’s JGC, TechnipFMC and Fluor. Including Rovuma, Mozambique has three LNG projects currently in the works, with a combined export capacity of 31 million t/y, representing about 10% of the global market.

  • After just recently exiting the Norwegian North Sea, ExxonMobil has hired BAML to find a buyer for its Malaysian oil and gas assets, as part of its US$15 billion divestment program. The assets could be worth as much as US$3 billion.

OIL PRICES - DAILY % CHANGE
WTI DIFFERENTIALS
STREAM CLOSE %CHG L 52WK H
BRENT$58.32▲0.150.47
 
86.29
WTI$52.59▼0.142.53
 
76.41
SCO$52.57▲0.825.15
 
65.55
C5+$50.19▲0.137.04
 
68.87
CDN LT$48.63▲0.720.83
 
61.30
WCS$37.98▼1.012.59
 
56.30

CRUDE OIL FUTURES CURVES
BRENT
WTI
█ OCT 9   █ OCT 2   █ SEP 25   █ SEP 18   (USD/BBL)
MARKET OVERVIEW
MARKETS
CURRENCIES & YIELDS
     TSX SECTORS
52WK Δ
     SPX SECTORS
52WK Δ
ENERGY SECTORS

TSX ENERGY SUB-SECTORS

SPX ENERGY SUB-SECTORS
TSX ENERGY STOCKS
TSX BULLISH INDICATORS
TOP 5
Gran Tierra (GTE +6.4%)
Seven Generations (VII +1.2%)
Enerflex (EFX +1.2%)
TC Energy (TRP +1.2%)
Enbridge (ENB +1.1%)
12-MO
HIGHS
None
TSX BEARISH INDICATORS
BOTTOM
5
Crescent Point (CPG -2.7%)
Whitecap Res (WCP -2.6%)
Encana (ECA -1.3%)
Frontera (FEC -1.2%)
Parkland Fuel (PKI -1.1%)
12-MO
LOWS
Tourmaline (TOU +0.3%)
Mullen Group (MTL -0.3%)
COMPANY TICKER CLOSE %CHG L 52WK H CHART
INTEGRATED
Suncor EnergySU38.92▲0.435.53
 
51.41D   W
Imperial OilIMO31.70▼-1.131.51
 
44.69D   W
Husky EnergyHSE8.74▲0.18.48
 
21.22D   W
MIDSTREAM
EnbridgeENB46.88▲1.139.40
 
51.22D   W
TC EnergyTRP68.46▲1.247.90
 
70.25D   W
Pembina PipelinePPL47.20▲0.339.15
 
50.65D   W
Inter PipelineIPL22.30▲1.018.60
 
25.42D   W
Keyera KEY30.62▲0.224.05
 
35.93D   W
Gibson EnergyGEI22.34▼-0.316.90
 
24.43D   W
LARGE CAP E&P
Cdn Natural ResCNQ32.57▼-0.630.01
 
42.56D   W
Cenovus EnergyCVE10.72▼-0.98.74
 
14.31D   W
EncanaECA5.55▼-1.35.25
 
16.59D   W
TourmalineTOU10.68▲0.310.45
 
23.44D   W
Vermilion EnergyVET19.22▼-0.618.18
 
42.66D   W
SERVICES
Badger DaylightingBAD37.85▼-0.525.68
 
49.57D   W
Pason SystemsPSI15.31▲0.114.82
 
24.57D   W
ShawcorSCL14.10▼-0.314.03
 
25.08D   W
EnerflexEFX10.91▲1.210.63
 
20.38D   W
Secure EnergySES4.45▼-0.24.32
 
9.44D   W
REFINING & MARKETING
Parkland FuelPKI44.07▼-1.131.59
 
47.45D   W
S&P 500 ENERGY STOCKS
SPX BULLISH INDICATORS
TOP 5
Hess Corp (HES +3.6%)
Pioneer Natural Res (PXD +2.5%)
Valero Energy (VLO +2.1%)
ConocoPhillips (COP +2%)
Concho Res (CXO +1.9%)
12-MO
HIGHS
None
SPX BEARISH INDICATORS
BOTTOM
5
Cabot O&G (COG -2%)
Cimarex Energy (XEC -1.3%)
Williams Co (WMB -0.8%)
Helmerich & Payne (HP -0.7%)
Ntl-Oilwell Varco (NOV -0.5%)
12-MO
LOWS
EOG Resources (EOG -0.2%)
Occidental Petro (OXY 0%)
Marathon Oil (MRO +0.8%)
COMPANY TICKER CLOSE %CHG L 52WK H CHART
INTEGRATED
Exxon MobilXOM67.44▲1.164.65
 
86.88D   W
ChevronCVX113.14▲1.2100.22
 
127.60D   W
MIDSTREAM
Kinder MorganKMI20.18▲0.914.62
 
21.50D   W
Williams CoWMB22.72▼-0.820.36
 
29.55D   W
ONEOKOKE68.61▲0.650.26
 
77.21D   W
LARGE CAP E&P
ConocoPhillipsCOP54.94▲2.050.13
 
79.96D   W
EOG ResourcesEOG68.59▼-0.268.09
 
133.53D   W
Occidental PetroOXY40.840.040.45
 
82.81D   W
Pioneer Natural ResPXD126.51▲2.5114.79
 
189.78D   W
Hess CorpHES64.35▲3.635.59
 
73.19D   W
SERVICES
SchlumbergerSLB30.90▲0.730.65
 
63.65D   W
Baker HughesBHGE21.61▲1.120.09
 
32.99D   W
HalliburtonHAL18.27▲0.116.97
 
42.57D   W
TechnipFMCFTI22.62▲1.218.20
 
31.16D   W
Ntl-Oilwell VarcoNOV20.19▼-0.518.05
 
46.17D   W
REFINERS
Phillips 66PSX102.71▲1.978.44
 
119.14D   W
Marathon PetroMPC60.56▲1.243.96
 
85.06D   W
Valero EnergyVLO85.07▲2.168.81
 
117.51D   W
HollyFrontierHFC52.26▲0.337.73
 
69.50D   W
NYSE ADRs
COMPANY TICKER CLOSE %CHG L 52WK H CHART
Royal Dutch ShellRDS.A56.55▲0.254.56
 
68.59D   W
TotalTOT49.09▲1.147.70
 
64.13D   W
BPBP37.17▲0.835.73
 
46.23D   W
EniE29.80▲1.428.54
 
37.61D   W
EquinorEQNR17.93▼-0.616.24
 
28.26D   W
ANALYST RATINGS

UPGRADES

  • None.

DOWNGRADES

  • Birchcliff Energy (BIR): Downgraded from Action List Buy to Buy at TD Securities.

  • Cheniere Energy Partners (CQP): Downgraded from Outperform to Market Perform at Bernstein.

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
• PRICE CHARTS PROVIDED BY STOCKCHARTS.COM ARE DIVIDEND ADJUSTED

NOTES:
• OIL PRICES, FUTURES AND DIFFERENTIALS SHOWN IN USD/BBL
• WCS = WESTERN CANADIAN SELECT; C5+ = EDMONTON CONDENSATE; SCO = SYNTHETIC CRUDE
• FUTURES CURVES REFLECT 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
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