Falling US stockpiles and weaker USD sends oil prices higher
Today's energy market action:
- Inventory drawdowns in the US and a weaker greenback helped boost oil prices on Wednesday. Brent rose 1.3%, while WTI posted a 1.4% increase.
- The Energy Information Administration reported a whopping 9.6 million barrel decline in crude stockpiles, seen mostly in the Gulf Coast. Crude exports continue to gain momentum, reaching 3.4 million bbl/day at the end of last week.
- Heating oil and gasoline both rose about 1% for the day, helped by another 9 million barrel drawdown in product stockpiles south of the border.
- In Canada, the discount on Edmonton Condensate narrowed slightly, sending C5+ up 2%. Differentials on Canadian light and heavy crude were roughly unchanged. WCS and Canadian Light both rose about 1.5% for the day.
Today's treasury, currency and equity market action:
- US Fed Chair Jerome Powell warned of a weakening global economy and signalled intentions to keep interest rates unchanged in the foreseeable future. The news sent bond yields tumbling, and sank the US dollar another 0.7%.
- Markets initially rallied during Powell's speech, but mostly fizzled by the end of the day. The NYSE declined about 0.5%, while the TSX dipped 0.1%.
- Energy was a notable bright spot on Wednesday, rising almost 1% on the S&P 500 and 2% on the TSX.
- Producers were once again the best performers on both sides of the border. The US energy services subsector also posted decent gains for the day.
Today's notable energy news:
- Natural gas spot prices in the West Texas Permian region dropped to US$0.12/MMBtu on Wednesday, due to a failed compressor station that reduced capacity on the El Paso Natural Gas Pipeline. Several new pipelines are expected to come online later this year, which should reduce the Waha discount to Henry Hub. El Paso is a subsidiary of Kinder Morgan.
- In a bid to raise cash, the Nigerian government says it plans to reduce its stake in projects owned jointly with the world's largest oil majors. State-owned NNPC owns a 55% stake in its JVs with Royal Dutch Shell, and 60% stake in all other JVs, including those held with Chevron and ExxonMobil. The government wants to see its share reduced to 40%.
- Danish shipper Maersk dumped its entire 3.75% stake in Total, acquired during the sale of Maersk Oil in 2017. The 17.3 million shares were sold for gross proceeds of €884 million.
- TechnipFMC announced a "significant" subsea contract from Equinor for the Johan Sverdrup Phase 2 development, located in the Norwegian North Sea.
Today's Q4/2018 earnings and 2019 forecasts:
- Cardinal Energy posted a net profit of $84.8 million in Q4 and $60.5 million for the full-year 2018, including a $76.5 million gain on the reversal of a previous impairment change. The company averaged 20,585 boe/day last year, up 11% from 2017. Cardinal voluntarily curtailed output by about 1,100 boe/day late last year, but says it remains "positive" on its outlook for 2019 and beyond.
- Pipestone Energy set a 2019 capital budget of between $145 and $165 million, and says it expects to exit 2019 at about 15,000 boe/day.
- InPlay Oil posted a fourth quarter loss of $8 million, despite a 20% increase in output. The company says it was hit hard by low oil prices at the end of last year, but the upcoming first quarter should be much better. The company set a 2019 capital spending budget of $36 million.
|Suncor Energy||SU||46.09||▲0.8||35.53||55.47||D W|
|Imperial Oil||IMO||37.08||▲1.1||33.43||44.91||D W|
|Husky Energy||HSE||13.66||▼-0.5||13.33||22.99||D W|
|Pembina Pipeline||PPL||49.92||▲0.8||37.60||50.32||D W|
|Inter Pipeline||IPL||22.07||▲0.2||18.60||25.66||D W|
|Gibson Energy||GEI||23.41||▲0.9||15.90||23.47||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||37.74||▲2.2||30.11||49.08||D W|
|Cenovus Energy||CVE||12.19||▲3.2||8.74||14.84||D W|
|Vermilion Energy||VET||34.05||▲2.3||26.67||49.67||D W|
|Pason Systems||PSI||20.48||▼-0.5||16.61||24.57||D W|
|Mullen Group||MTL||12.50||▼-1.4||11.26||16.93||D W|
|Secure Energy||SES||8.63||▲0.5||6.25||9.44||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||41.22||▲1.0||27.96||47.45||D W|
|Exxon Mobil||XOM||81.32||▲0.6||64.65||87.36||D W|
|Kinder Morgan||KMI||20.10||▲0.2||14.62||20.30||D W|
|Williams Co||WMB||28.35||▲0.8||20.36||32.22||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||95.89||▲3.2||82.04||133.53||D W|
|Occidental Petro||OXY||67.26||▲1.7||56.83||87.67||D W|
|Anadarko Petro||APC||45.40||▲2.1||40.40||76.70||D W|
|Pioneer Natural Res||PXD||144.44||▲4.5||119.08||213.40||D W|
|Baker Hughes||BHGE||28.25||▲1.6||20.09||37.76||D W|
|Ntl-Oilwell Varco||NOV||28.37||▲0.8||24.27||49.08||D W|
|Marathon Petro||MPC||62.19||▲0.3||54.29||88.45||D W|
|Phillips 66||PSX||98.18||▼-0.7||78.44||123.97||D W|
|Valero Energy||VLO||86.44||▲0.0||68.81||126.98||D W|
Carrizo Oil & Gas (CRZO): Upgraded from Equal Weight to Overweight at Capital One.
Ensign Energy Services (ESI.TO): Upgraded from Hold to Buy at Canaccord Genuity.
Oasis Petroleum (OAS): Upgraded from Underweight to Equal Weight at Capital.
Whiting Petroleum (WLL): Upgraded from Equal Weight to Overweight at Capital One.
Antero Resources (AR): Downgraded from Equal Weight to Underweight at Capital One.
Approach Resources (AREX): Downgraded from In-Line to Underperform at Imperial Capital.
Callon Petroleum (CPE): Downgraded from Overweight to Equal Weight at Capital One.
Cimarex Energy (XEC): Downgraded from Overweight to Equal Weight at Capital One.
Comstock Resources (CRK): Downgraded from Equal Weight to Underweight at Capital One.
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