Oil prices perk up on better-than-expected US inventory numbers
Today's energy market summary:
- Oil prices got a small boost on Wednesday, due in part to a smaller than expected increase in crude inventories south of the border.
- Most benchmarks rose about 1%, including Canadian crude streams.
- Gasoline was the big winner in energy commodities today, rising 2.3% as US product stockpiles continue to ease, particularly distillates.
- Heating oil also gained about 1% while Henry Hub gas prices were unchanged.
Today's treasury, currency and equity market action:
- The US dollar rose another 0.4% today, ending the day just above 96. The lonnie fell 0.6%.
- The Australian dollar was today's worst performer, sinking almost 2% after the country's central bank hinted it may need to lower rates due to a weakening economy.
- Bond yields were flat to lower on Wednesday on both sides of the border.
- A relatively quiet day in equity markets, with the S&P 500 declining 0.2%, and the TSX rising 0.1%.
- Despite a good showing from Canadian energy stocks, the TSX energy sector was unchanged due to declines in heavy-weights Canadian Natural Resources and Husky Energy.
- The S&P 500 energy basket lost 0.8%, with most components posting losses for the day.
Today's notable energy news:
- In an affidavit submitted to the BC Supreme Court, executives at TransCanada warn that the $6.2 billion Coastal GasLink project, and potentially the $18 billion LNG Canada project, are at risk of being cancelled if the company is not allowed to proceed with construction. TransCanada is seeking a permanent injunction to prevent protesters from blocking the Morice River bridge, located in the BC Interior. Coastal GasLink hopes to begin service in 2023, in order to meet LNG Canada's targeted in service date of late 2024.
- Suncor Energy CEO Steve Williams predicts the Alberta government will put an end to its curtailment program earlier than expected. Williams points to rapidly declining exports by rail, which have now been rendered uneconomical due to a narrow discount between heavy oil prices in Alberta versus the Gulf Coast. Echoing a similar sentiment from Imperial Oil last week, Williams says the sharp rebound in Canadain crude prices has hurt margins in Suncor's downstream refining business.
- Calgary-based Perpetual Energy says proved plus probable reserves totalled 67.9 million barrels of oil equivalent at the end of 2018, up 2% from the previous year. Most of those barrels are located at the company's East Edson property.
- ExxonMobil and Hess jointly announced two new discoveries in the Stabroek Block, located offshore Guyana. The companies say the field holds enough oil to support at least five FPSOs, producing more than 750,000 bbl/day by 2025. Two phases of development are currently under construction, with Phase 1 expected to come on-line in early 2020. This is the 12th discovery in Stabroek, now estimated to hold more than 5 billion barrels of oil equivalent.
- Essar Oil UK announced the acquisition of several midstream assets from BP, including an equity stake in the UKOP pipeline, the Kingsbury Terminal and the Northampton Terminal. Financial terms of the deal were not disclosed.
Today's EPC news:
- TechnipFMC was awarded a "large" EPC contract by Petrobras for the Mero 1 field, located in the Brazil's Santos Basin. The contract was said to be worth between US$500 million and US$1 billion.
- UK's Wood Group and KBR were awarded a "multimillion dollar" FEED contract for Royal Dutch Shell's Crux project, located offshore Western Australia. Crux is intended to supply gas and condensate to the Prelude FLNG Facility, located in the same area.
Today's Q4/2018 earnings:
- Revenues at National Oilwell Varco rose 22% y/y to US$2.4 billion last quarter. The company warns revenues will decline in Q1 due to low oil prices at the end of last year, but should rebound later in the year, particularly in international and offshore markets. For the full year 2018, the company posted a US$31 million loss on US$8.5 billion in revenues.
- Equinor posted an adjusted profit of US$4.4 billion in the fourth quarter, up 10% y/y, while production rose 2% to 2.17 million boe/day. For the full year 2018, profits topped US$18 billion, up 42% from the previous year. The company generated over US$6 billion in free cash flow last year, and reduced its debt ratio from 29% to 22%. Equinor has set a 2019 capital budget of US$11 billion, with production growth targeted at about 3% annually through 2025.
|CURRENCIES & YIELDS|
|Suncor Energy||SU||43.76||▲0.6||35.53||55.47||D W|
|Imperial Oil||IMO||36.19||▲0.2||33.43||44.91||D W|
|Husky Energy||HSE||15.49||▼-1.0||13.33||22.99||D W|
|Pembina Pipeline||PPL||47.57||▲0.3||37.60||47.84||D W|
|Inter Pipeline||IPL||20.87||▲0.4||18.60||25.66||D W|
|Gibson Energy||GEI||20.16||▲0.1||15.68||23.32||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||35.22||▼-1.5||30.11||49.08||D W|
|Cenovus Energy||CVE||10.36||▲1.3||8.74||14.84||D W|
|Vermilion Energy||VET||32.61||▲1.8||26.67||49.67||D W|
|Pason Systems||PSI||20.00||▲0.1||16.05||24.57||D W|
|Mullen Group||MTL||12.21||▲0.3||11.39||16.93||D W|
|Secure Energy||SES||7.90||▲1.0||6.25||8.91||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||37.54||▼-0.5||27.36||47.45||D W|
|Exxon Mobil||XOM||75.26||▼-0.4||64.65||87.36||D W|
|Kinder Morgan||KMI||18.06||▼-2.2||14.62||18.67||D W|
|Williams Co||WMB||27.06||▼-1.1||20.36||32.22||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||96.18||▼-2.2||82.04||133.53||D W|
|Occidental Petro||OXY||66.63||▼-1.0||56.83||87.67||D W|
|Anadarko Petro||APC||45.45||▼-7.4||40.40||76.70||D W|
|Pioneer Natural Res||PXD||141.79||▼-1.3||119.08||213.40||D W|
|Baker Hughes||BHGE||24.88||▼-0.6||20.09||37.76||D W|
|Ntl-Oilwell Varco||NOV||30.58||▲1.3||24.27||49.08||D W|
|Marathon Petro||MPC||66.87||▼-0.5||54.29||88.45||D W|
|Phillips 66||PSX||94.42||▼-0.8||78.44||123.97||D W|
|Valero Energy||VLO||85.92||▼-0.1||68.81||126.98||D W|
Plains All American Pipeline (PAA): Upgraded from Hold to Buy at Tudor Pickering.
EQM Midstream Partners (EQM): Downgraded from Overweight to Neutral at JPMorgan.
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