Oil prices dip despite lower output from Russia and Venezuelan crude stranded at sea
Today's energy market summary:
- Despite reports of stranded Venezuelan crude in the Gulf of Mexico and lower output from Russia, oil prices retreated slightly on Monday.
- WTI fell below US$55 a barrel (-1.3%), while Brent dipped 0.4% to US$62.50.
- Differentials for Canadian benchmarks were little changed. WCS and Canadian Light fell about 2%, while Edmonton Condensate (C5+) gave back about 1%.
- Russia says it has made good on its promise to reduce output this year. The country's energy minister claims production decreased by 47,000 bbl/day in January, versus last October's level.
- Gasoline and heating oil dipped slightly for the day, while Henry Hub declined almost 2%.
Today's equity, treasury and currency market action:
- Except for Canada, most global bond yields moved slightly higher on Monday. The US dollar moved up 0.3%, sending other global currencies lower.
- Most global markets kicked-off the week in the positive. Today's best performer was the NASDAQ (+1.2%), while European markets were roughly unchanged. Chinese markets will be closed for most of the week due to Lunar New Year celebrations.
- In Toronto, the TSX gained 0.6%, with cannabis stocks leading to the upside. The S&P 500 rose 0.7%, with technology and industrial stocks leading the gains.
- The Canadian energy sector gained 1.2%, as producers and large-cap integrated names recovered some of the losses from last week. Crescent Point touched a new multi-year low, while Enbridge touched a new 52-week high. Oilfield services was the worst performing subsector.
- The US energy sector gained just 0.2%, dragged lower by ExxonMobil, Occidental Petroleum and Valero Energy. Most other energy names posted gains for the day.
Today's notable energy news:
- Pembina Pipeline and Kuwait's Petrochemical Industries Company have sanctioned their 550,000 t/y integrated propane dehydrogenation plant and polypropylene upgrading facility. The $4.5 billion facility will be located next to Pembina's Redwater fractionation complex in Sturgeon County, Alberta.
- Canadian Natural Resources says it will commence the repurchase of up to 61.4 million CNQ shares this week, to be executed over the next 13 months. The company says it believes share buybacks are an "effective use of capital and an efficient means to return value to its shareholders."
- Valero Energy and Chevron have been blocked from receiving Venezuelan crude shipments, even though the shipments were booked before US sanctions were imposed at the end of January. US refineries are technically allowed to purchase Venezuelan crude during the "wind-down" period that extends to the end of April. However, sanctions currently prohibit US companies from transferring funds to the country's state-owned producer, PDVSA.
- Water treatment firm Ecolab announced plans to spin off its upstream energy business as a stand-alone publicly-traded company. The division will include its Oil Field Chemicals production division, as well as its drilling and well completion chemistry business. Net proceeds will be paid out to Ecolab shareholders in the form of a dividend. The transaction is expected to be completed by the middle of 2020.
- Engineering services provider KBR says it was awarded a debottlenecking contract by SATORP, a joint-venture between Saudi Aramco and Total, for its 440,000 bbl/day refinery in Jubail, Saudi Arabia. The project is expected to increase refinery throughput by 15%, once completed by the middle of 2020. Financial terms of the deal were not disclosed.
|CURRENCIES & YIELDS|
|Suncor Energy||SU||43.38||▲2.4||35.53||55.47||D W|
|Imperial Oil||IMO||36.39||▲2.4||33.43||44.91||D W|
|Husky Energy||HSE||15.64||0.0||13.33||22.99||D W|
|Pembina Pipeline||PPL||46.88||▼0.0||37.60||47.84||D W|
|Inter Pipeline||IPL||20.84||▼-0.2||18.60||25.66||D W|
|Gibson Energy||GEI||19.92||▼-1.6||15.68||23.32||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||35.57||▲1.6||30.11||49.08||D W|
|Cenovus Energy||CVE||10.11||▲0.5||8.74||14.84||D W|
|Vermilion Energy||VET||32.29||▲1.0||26.67||49.67||D W|
|Pason Systems||PSI||20.03||▼-2.2||16.05||24.57||D W|
|Mullen Group||MTL||11.95||▼-1.2||11.39||16.93||D W|
|Secure Energy||SES||7.91||▼-1.7||6.25||8.91||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||37.06||▼-0.6||27.36||47.45||D W|
|Exxon Mobil||XOM||74.82||▼-1.4||64.65||87.36||D W|
|Kinder Morgan||KMI||18.36||▲0.1||14.62||18.67||D W|
|Williams Co||WMB||27.37||▼-0.2||20.36||32.22||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||99.38||▲0.5||82.04||133.53||D W|
|Occidental Petro||OXY||67.74||▼-0.5||56.83||87.67||D W|
|Anadarko Petro||APC||49.13||▲1.4||40.40||76.70||D W|
|Pioneer Natural Res||PXD||144.57||▲1.1||119.08||213.40||D W|
|Baker Hughes||BHGE||24.58||▲0.9||20.09||37.76||D W|
|Ntl-Oilwell Varco||NOV||30.15||▲0.8||24.27||49.08||D W|
|Marathon Petro||MPC||65.91||▲0.7||54.29||88.45||D W|
|Phillips 66||PSX||94.76||▲0.6||78.44||123.97||D W|
|Valero Energy||VLO||84.79||▼-0.5||68.81||126.98||D W|
ConocoPhillips (COP): Upgraded from Neutral to Buy at Goldman Sachs.
Diamond Offshore Drilling (DO): Upgraded from Accumulate to Buy at Fearnley.
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