Canadian heavy crude posts third day of losses, pulling TSX energy sector lower
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.
|Suncor Energy||SU||38.92||▲0.4||35.53||51.41||D W|
|Imperial Oil||IMO||31.70||▼-1.1||31.51||44.69||D W|
|Husky Energy||HSE||8.74||▲0.1||8.48||21.22||D W|
|TC Energy||TRP||68.46||▲1.2||47.90||70.25||D W|
|Pembina Pipeline||PPL||47.20||▲0.3||39.15||50.65||D W|
|Inter Pipeline||IPL||22.30||▲1.0||18.60||25.42||D W|
|Gibson Energy||GEI||22.34||▼-0.3||16.90||24.43||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||32.57||▼-0.6||30.01||42.56||D W|
|Cenovus Energy||CVE||10.72||▼-0.9||8.74||14.31||D W|
|Vermilion Energy||VET||19.22||▼-0.6||18.18||42.66||D W|
|Badger Daylighting||BAD||37.85||▼-0.5||25.68||49.57||D W|
|Pason Systems||PSI||15.31||▲0.1||14.82||24.57||D W|
|Secure Energy||SES||4.45||▼-0.2||4.32||9.44||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||44.07||▼-1.1||31.59||47.45||D W|
|Exxon Mobil||XOM||67.44||▲1.1||64.65||86.88||D W|
|Kinder Morgan||KMI||20.18||▲0.9||14.62||21.50||D W|
|Williams Co||WMB||22.72||▼-0.8||20.36||29.55||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||68.59||▼-0.2||68.09||133.53||D W|
|Occidental Petro||OXY||40.84||0.0||40.45||82.81||D W|
|Pioneer Natural Res||PXD||126.51||▲2.5||114.79||189.78||D W|
|Hess Corp||HES||64.35||▲3.6||35.59||73.19||D W|
|Baker Hughes||BHGE||21.61||▲1.1||20.09||32.99||D W|
|Ntl-Oilwell Varco||NOV||20.19||▼-0.5||18.05||46.17||D W|
|Phillips 66||PSX||102.71||▲1.9||78.44||119.14||D W|
|Marathon Petro||MPC||60.56||▲1.2||43.96||85.06||D W|
|Valero Energy||VLO||85.07||▲2.1||68.81||117.51||D W|
UPDATED: DAILY (END-OF-DAY)
• 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
• 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