Geopolitical tensions give oil prices a lift on Monday
Today's energy market action:
Ongoing geopolitical tensions in Libya helped lift energy commodities on Monday, including crude oil.
WTI rose over 2%, touching a fresh 5-month high, while Brent gained another 1%.
Canadian differentials were little changed for the day. WCS and Canadian Light both gained 2.4% on Monday.
Gasoline and heating oil also rose almost 1%.
Today's currency and equity market update:
The US dollar dipped 0.3%, helping the loonie rise back above 75 cents. Bond markets were little moved on Monday.
US markets opened the day lower, but staged a recovery before the closing bell.
The NYSE, S&P 500 and TSX all edged up 0.1%.
Producers and integrated stocks were the best performers in Canada, while the energy services subsector had the biggest gains in US markets.
Today's geopolitical news:
Renewed fighting in Libya is raising concerns of more supply disruptions. The Libyan National Army has now seized control of oil fields on the south side of the country, and is advancing towards the capital. The country's production was just recently restored after force majeure was lifted on its largest oilfield.
A senior Russian official has signalled a willingness to end his country's production pact with OPEC. Kirill Dmitriev, a key supporter of OPEC's output caps, now says an "improving market situation" could justify an increase in production by as much as 228,000 bbl/day, as early as June. Rosneft head Igor Sechin has also called for Russia to increase output, complaining of lost market share. The next meeting between OPEC and its allies is scheduled for the end of June.
Today's other notable energy news:
Private-equity firm Carlyle Group has purchased a 30% stake in Madrid-based Cepsa for US$3.6 billion from Abu Dhabi sovereign wealth fund Mubadala Investment Co. The deal includes the company's debt. Carlyle also retains the right to purchase another 10% stake.
Engineering and technology provider KBR has selected Baker Hughes (BHGE) for its on-going LNG standardization project. Under terms of the deal, the mid-size LNG modules will use BHGE's gas turbine driver technology. KBR is responsible for the design and construction about one-third of the world's LNG facilities.
Royal Dutch Shell signed an agreement with China's Sinopec to study unconventional oil reserves contained within the East China block. China’s shale oil reportedly has very low permeability, which translates into low well productivity, making the economics challenging.
Ensign Energy Services subsidiary Ensign Drilling announced an offering of US$700 million in Senior Notes due in 2024. Net proceeds will be used to replay outstanding loans under Ensign's existing senior loan facility.
Today's analyst action:
Analysts from Industrial Alliance Securities remain bullish on large-cap Canadian midstream names and smaller-cap E&Ps. Analyst Jeremy Rosenfield says he expects "mid-single-digit growth" in earnings and cash flow for both TransCanada and Enbridge, over the longer term. Rosenfield remains bullish on both stocks at current levels, assigning each company a "buy" rating. In the producer space, analyst Michael Charlton says "the bulls are gathering" due to falling global supply and expectations for "more friendly" provincial and federal levels of government. Charlton's top picks include Surge Energy, Tamarack Valley Energy and Yanagarra Energy, due in part to a proportion of liquids production and lower hedging.
The National Bank says Canada's energy sector is showing signs of structural improvement, due in part to better pricing for heavy oil, and ramp-up of crude-by-rail volumes. The bank is especially bullish on Birchcliff Energy, Cenovus Energy and MEG Energy, but remains cautious on Encana.
|Suncor Energy||SU||44.77||▲0.6||35.53||55.47||D W|
|Imperial Oil||IMO||37.47||▲2.5||33.52||44.91||D W|
|Husky Energy||HSE||13.99||▲2.2||13.21||22.99||D W|
|Pembina Pipeline||PPL||49.97||▼-0.5||38.83||50.45||D W|
|Inter Pipeline||IPL||21.88||▼-0.2||18.60||25.66||D W|
|Gibson Energy||GEI||23.40||▲0.3||16.15||23.75||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||38.93||▲1.4||30.11||49.08||D W|
|Cenovus Energy||CVE||12.84||▲2.1||8.74||14.84||D W|
|Vermilion Energy||VET||33.92||▲0.4||26.67||49.67||D W|
|Pason Systems||PSI||20.51||▲1.7||17.18||24.57||D W|
|Mullen Group||MTL||12.10||▼-1.2||11.26||16.93||D W|
|Secure Energy||SES||8.61||▲0.1||6.25||9.44||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||40.45||0.0||28.07||47.45||D W|
|Exxon Mobil||XOM||83.00||▲0.6||64.65||87.36||D W|
|Kinder Morgan||KMI||19.94||▼-0.6||14.62||20.44||D W|
|Williams Co||WMB||29.00||▼-0.4||20.36||32.22||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||99.48||▲0.9||82.04||133.53||D W|
|Occidental Petro||OXY||68.37||▲0.5||56.83||87.67||D W|
|Anadarko Petro||APC||47.19||▲0.4||40.40||76.70||D W|
|Pioneer Natural Res||PXD||151.73||▲0.8||119.08||213.40||D W|
|Baker Hughes||BHGE||26.82||▲0.2||20.09||37.76||D W|
|Ntl-Oilwell Varco||NOV||28.32||▲0.4||24.27||49.08||D W|
|Marathon Petro||MPC||63.36||▼-0.2||54.29||88.45||D W|
|Phillips 66||PSX||98.30||▲0.5||78.44||123.97||D W|
|Valero Energy||VLO||86.20||▼-0.6||68.81||126.98||D W|
MEG Energy (MEG.TO): Upgraded from Sector Perform to Outperform at National Bank.
Petrobras (PBR): Upgraded from Neutral to Outperform at Credit Suisse.
UPDATED: DAILY (END-OF-DAY)
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• OIL PRICES, FUTURES AND DIFFERENTIALS IN USD/BBL
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