TSX energy breaks to the upside, returning to the highs of last November
Today in energy markets:
Brent rose 1.6%, on news of a larger-than-expected decline in OPEC production for the month of March.
Canada's light and heavy oil benchmarks rose 1%, inline with gains for WTI. Differentials on Canadian crude were little changed.
Gasoline prices soared another 3.5%, after the Energy Information Administration (EIA) reported an eighth consecutive week of drawdowns in US stockpiles. Heating oil also rose over 2%.
A late winter storm, expected to blow through the US Midwest, is having little effect on natural gas markets. According to the EIA, gas stockpiles are 30% below the five-year average for this time of the year. Near-month Henry Hub prices were unchanged on Wednesday, ending the day at US$2.70/MMBtu.
Today's treasury, currency and equity market update:
US bond yields mostly dipped lower for the day, particularly for shorter duration notes. Most global currencies were little changed.
Equity markets were mixed on Wednesday. Most Asian markets posted losses for the day, while UK and European exchanges were little changed.
Except for the Dow 30, most US exchanges and indices ended the day slightly higher. The NYSE and S&P 500 rose about 0.3%. The SPX energy sector rose 0.4% for the day.
In Toronto, the TSX rose 0.4%. Energy was the best performing sector in Canada, rising 1.7%, and now returning to the highs of last November.
US refiners and larger cap Canadian producers were today's stand-out performers.
Today's supply/demand update from OPEC:
In this month’s Oil Market Report, OPEC lowered its 2019 world oil demand growth forecast from 1.24 to 1.21 million bbl/day, due to an economic slowdown in OECD countries. Total world demand is now expected to top 100 million bbl/day sometime by the end of the summer.
OPEC crude oil production decreased by 534,000 bbl/day in March to about 30 million bbl/day.
Non-OPEC oil supply growth in 2019 adjusted lower by 60,000 bbl/day to 64.54 million bbl/day due to outages in Kazakhstan, Brazil and Canada, offsetting upward revisions from the US and Russia.
The United Arab Emirates is disputing reports that Russia may raise output in June, insisting the country would not increase output unless given the green-light by its OPEC partners. OPEC+ agreed to take 1.2 million bbl/day of crude off world markets this year, but those targets have largely been met by Saudi Arabia and Venezuela. Russia promised to cut production by 228,000 bbl/day, but has so far failed to hit those targets.
Today’s notable pipeline news:
President Trump signed two Executive Orders on Wednesday, aimed at scaling back state powers under the EPA’s Clean Water Act. The Act has been used to stop construction of William Co's Constitution Pipeline in New York, and block coal-export terminals in Washington State. Trump also plans to expedite the permitting process for cross-border pipeline construction, which may help revive TransCanada's long-delayed Keystone XL project.
Williams Co announced the sale of its 50% stake in Jackalope Gas Gathering Services to its JV partner Crestwood for US$485 million in cash. Crestwood now becomes a 100% owner of the assets, located in Wyoming’s Powder River Basin, and will assume operatorship. Williams says net proceeds will be used for growth capital and debt reduction.
After successfully selling its TAG natural gas pipeline network for almost US$9 billion, Petrobras is now reportedly looking to divest three more pipelines. The three lines stretch about 1,000 km, linking the offshore Santos basin to onshore infrastructure. The pipelines are estimated to be worth about US$3 billion.
Today's other notable energy news:
After years of negotiations, the Brazilian government has agreed to pay Petrobras US$9 billion for investments made in offshore oil fields that are planned to be auctioned in October. Under a 2010 agreement, Petrobras won the right to develop 5 billion barrels of oil in the pre-salt basin, but the government now wants to sell the rights to as much as 15 million barrels. ExxonMobil and Royal Dutch Shell have expressed interest in the region, which could potentially hold twice the reserves of Mexico or Norway. The government hopes to raise as much as US$100 billion from the auction.
Canadian energy firms Gran Tierra and Frontera Energy were among several successful bidders in Ecuador's latest auction in the Intracampos basin. The Ecuadorian government says more than US$1 billion will be required to develop the field, estimated to hold 854 million barrels of oil.
Royal Dutch Shell has decided to exit the Baltic LNG project, after project-lead Gazprom decided to integrate the LNG facility to its gas processing plants. Shell's other joint-ventures with Gazprom in Russia are not affected by the decision. Baltic LNG is located in Russia's Leningrad Region, with a planned capacity of about 10 million t/y.
Equinor has once again delayed start-up of its Mariner heavy oil field in the UK North Sea, potentially to the second half of this year. The company says it needs more time to complete safety checks on the platform’s electrical couplings. The US$6 billion project was originally scheduled due to come online in 2017.
According to Bloomberg, ExxonMobil has began discussions with the Israeli government to build a floating LNG platform, which would process gas from the Leviathan gas field. Leviathan is located in the Eastern Mediterranean sea, and is estimated to hold 600 billion cubic meters of gas, making it one of the largest discoveries of the last decade.
In a filing to securities regulators this week, ExxonMobil also warned it expects first quarter downstream earnings to decline US$1.3 billion from the previous quarter, due to higher crude oil prices and a US$600 million hedging loss. The company also says its upstream production volumes will be inline with Q4.
|Suncor Energy||SU||44.02||▼-0.3||35.53||55.47||D W|
|Imperial Oil||IMO||38.66||▲3.2||33.52||44.91||D W|
|Husky Energy||HSE||14.21||▲2.1||13.21||22.99||D W|
|Pembina Pipeline||PPL||49.97||▲1.0||39.15||50.45||D W|
|Inter Pipeline||IPL||22.08||▲0.1||18.60||25.66||D W|
|Gibson Energy||GEI||23.50||▲1.0||16.15||23.75||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||39.52||▲1.1||30.11||49.08||D W|
|Cenovus Energy||CVE||13.36||▲4.8||8.74||14.84||D W|
|Vermilion Energy||VET||33.99||▲0.3||26.67||49.67||D W|
|Pason Systems||PSI||20.11||▼-0.3||17.18||24.57||D W|
|Mullen Group||MTL||12.06||▲0.2||11.26||16.93||D W|
|Secure Energy||SES||8.50||▲0.4||6.25||9.44||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||40.18||▼-1.0||28.59||47.45||D W|
|Exxon Mobil||XOM||81.56||▼-0.4||64.65||87.36||D W|
|Kinder Morgan||KMI||19.84||▼-0.3||14.62||20.44||D W|
|Williams Co||WMB||28.66||▼-0.2||20.36||32.22||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||98.73||▲0.2||82.04||133.53||D W|
|Occidental Petro||OXY||67.18||▼-0.2||56.83||87.67||D W|
|Anadarko Petro||APC||46.80||▲1.4||40.40||76.70||D W|
|Pioneer Natural Res||PXD||150.49||▲1.1||119.08||213.40||D W|
|Baker Hughes||BHGE||26.87||▲0.7||20.09||37.76||D W|
|Ntl-Oilwell Varco||NOV||28.68||▲2.3||24.27||49.08||D W|
|Marathon Petro||MPC||63.60||▲2.3||54.29||88.45||D W|
|Phillips 66||PSX||98.61||▲1.2||78.44||123.97||D W|
|Valero Energy||VLO||88.43||▲3.9||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