Energy traders hit the sell button on warnings of slowing global growth
Today's energy market summary:
- Oil prices were dragged lower on Tuesday, as traders continue to digest weak economic data out of China and warnings from the IMF that the global expansion may be weakening.
- Brent and WTI declined about 2%, while Canadian Light and Edmonton Condensate (C5+) fell closer to 3%. The heavy oil discount narrowed by US$0.70 per barrel, sending WCS down 1.2%.
- US natural gas prices slid almost 13%, giving back most of the gains from last week. Alberta's AECO gas edged up 1%.
- Wholesale gasoline prices declined 3.5%.
Today's equity market action:
- After several weeks of solid gains, global equity markets took a big drop on Tuesday, as US traders returned to their desks after Monday's holiday.
- The Nasdaq and the Dow Transports were the worst performers in US markets, each falling almost 2%. The Dow Jones Industrial gave back over 300 points (-1.2%), while the S&P 500 fell 1.4%. In Toronto, the TSX declined 0.8%.
- Energy was the worst performing sector in both Canadian and US markets, falling 3.5% on the TSX and 2.2% on the S&P 500. Losses were spread across all subsectors, with producers leading to the downside.
- The US dollar was unchanged for the day, despite a drop in bond yields. The loonie fell 0.8% on Tuesday.
Today's notable energy news:
- Tallgrass Energy and Kinder Morgan have agreed to jointly boost crude transport from Wyoming, Colorado, North Dakota and Western Canada into the Cushing storage hub, through new and existing pipelines. The combined system would carry 800,000 bbl/day of light crude and 150,000 bbl/day of heavy crude into Cushing by the second half of 2020.
- Camp-operator Civeo was awarded two contracts worth about US$90 million, including a 5-year deal for 1,540 room facility with an unnamed oil sands operator. The deal is expected to generate about $100 million in revenues.
- Natural gas deliveries through Enbridge’s Texas Eastern pipeline have been almost cut in half to about 1.3 Bcf/day, due to yesterday's explosion in southeast Ohio that injured two people. Enbridge says it continues to work with state and federal regulators to determine the cause of the blast.
- Equinor has halted exploration in the Barents Sea following an incident last week on Seadrill's West Hercules drilling rig. No injuries were reported. The exact cause of the incident is still under investigation.
- PetroChina warned it will need to take a US$1.5 billion write-down due to the sale of various assets. Fourth quarter revenues were also hit by lower oil prices and higher exploration costs i some of its fields.
- Western Gas Partners boosted its quarterly dividend to US$0.98 per share, up 2% from the previous quarter and up 7% from the previous year.
Today's Q4/2018 earnings releases and 2019 guidance updates:
- MEG Energy slashed its 2019 capital budget to just $200 million, less than one-third of its original forecast, setting aside an additional $75 million in growth funds, if market conditions improve. Production is expected to grow just 2% this year to about 90,000 bbl/day, reflecting the Alberta's curtailment program. The company has also revived plans to monetize its partial upgrading technology.
- EQT Corp is forecasting a 2019 capital budget of about US$2 billion, down from US$2.5 billion spent this year. Fourth quarter production is expected to average 394 Bcfe, up 5% from the previous quarter. Full year 2019 production is expected to average about 1.5 Bcfe.
- Halliburton reported Q4 revenues of US$5.9 billion, down 4% from the previous quarter. For the full year 2018, revenues came in at US$24 billion, up 16% from the previous year. The company says North American markets have "softened," decreasing demand for its completion services. However, demand remains robust internationally. Halliburton celebrates 100 years of service in 2019.
|CURRENCIES & YIELDS|
|Suncor Energy||SU||42.12||▼-2.7||35.53||55.47||D W|
|Imperial Oil||IMO||36.56||▼-0.4||33.43||44.91||D W|
|Husky Energy||HSE||16.38||▼-1.9||13.33||22.99||D W|
|Pembina Pipeline||PPL||44.53||▼-1.5||37.60||47.84||D W|
|Inter Pipeline||IPL||21.17||▼-1.1||18.60||25.88||D W|
|Gibson Energy||GEI||19.50||▼-2.6||15.68||23.32||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||34.34||▼-5.9||30.11||49.08||D W|
|Cenovus Energy||CVE||10.35||▼-2.5||8.74||14.84||D W|
|Vermilion Energy||VET||32.48||▼-1.7||26.67||50.46||D W|
|Pason Systems||PSI||20.69||▼-1.8||16.05||24.57||D W|
|Mullen Group||MTL||12.33||▼-2.5||11.39||16.93||D W|
|Secure Energy||SES||7.93||▼-2.1||6.25||9.82||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||37.37||▲0.3||27.36||47.45||D W|
|Exxon Mobil||XOM||71.89||▼-1.5||64.65||89.30||D W|
|Kinder Morgan||KMI||17.63||▼-2.1||14.62||19.71||D W|
|Williams Co||WMB||26.16||▼-0.9||20.36||33.67||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||96.86||▼-4.2||82.04||133.53||D W|
|Occidental Petro||OXY||65.12||▼-2.9||56.83||87.67||D W|
|Anadarko Petro||APC||47.08||▼-3.3||40.40||76.70||D W|
|Pioneer Natural Res||PXD||139.98||▼-3.4||119.08||213.40||D W|
|Baker Hughes||BHGE||23.77||▼-1.5||20.09||37.76||D W|
|Ntl-Oilwell Varco||NOV||29.54||▼-3.0||24.27||49.08||D W|
|Marathon Petro||MPC||64.82||▼-2.0||54.29||88.45||D W|
|Phillips 66||PSX||93.00||▼-2.4||78.44||123.97||D W|
|Valero Energy||VLO||82.01||▼-0.7||68.81||126.98||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
• 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