China fires back, sending stocks and bond yields sharply lower

China fires back, sending stocks and bond yields sharply lower

Today’s energy market action:

  • Oil prices took a step back on Monday, dragged lower by a sharp pullback in global equity markets.

  • Brent declined 0.6%, ending the day just above US$70 a barrel. WTI also ended the day 1% lower. Canadian Light and Western Canadian Select (WCS) declined over 1%, as differentials to WTI were little changed.

  • Gasoline fell 1.3%, ending Monday below US$2. Henry Hub was little changed for the day.

Today's treasury, currency and equity market action:

  • Markets tumbled on Monday after China retaliated against higher US tariffs, by raising Chinese tariffs on US imports. Late last week, US tariffs on US$200 billion in Chinese imports were increased from 10% to 25%. China has responded by boosting tariffs from 5% to 25% on US$60 billion in US imports. Talks between the two sides are ongoing. President Trump and President Xi have promised to meet at the next G20 summit, to be held in Japan at the end of June.

  • The news sent global bond yields tumbling, further inverting the short-end of the US yield curve.

  • The Chinese yuan plummeted to a 5-month low on Monday. The Australian dollar, which is heavily correlated to the Chinese economy, sank almost 1%, returning to the lows of early 2016. The Canadian dollar also dipped another 0.4%, ending Monday at 72.19 cents. The Japanese yen rose 0.6%, as traders fled to safe-haven assets. The US dollar was little changed for the day. 

  • Stock markets in the US opened sharply lower on Monday. The Dow Jones Industrial Average lost over 600 points for the day (-2.4%), the largest drop since January. The NASDAQ was the worst hit market in New York, falling 3.4%. NYSE declined 2% while the S&P 500 dropped 2.4%. Except for defensive utility names, all other sectors posted losses for the day. Energy declined 1.6%.

  • In Toronto, the TSX declined just 0.6%, helped by a good performance from gold stocks. Canadian energy stocks posted a 2.3% loss. Canadian midstream stocks were the only winners on Monday, helped by falling bond yields.

Today's notable energy news:

  • China increased tariffs on US LNG imports, from 10% to 25%, beginning June 1. China was once the largest buyer of US LNG, but that trade has since dwindled to almost nothing as the two superpowers squabble over trade, alleged spying and intellectual property rights. 

  • Oil field services provider Weatherford International filed for Chapter 11 bankruptcy protection, after reaching an agreement with its senior bondholders. CEO Mark McCollum says the company was unable to execute its "transformational plan" due to its high debt-load. Despite selling a number of assets over the past year, Weatherford's total liabilities are estimated at US$10.6 billion, which is expected to be cut by almost US$6 billion during the restructuring process. The company posted a US$481 million loss for the first quarter on revenues of US$1.35 billion.

  • Four commercial vessels were attacked just outside the Strait of Hormuz on Monday, including two Saudi crude carriers, a Norwegian product tanker and one fuel bunker from the UAE. Iran is suspected to be behind the ordeal, although no group has claimed responsibility so far. The Maritime Administration warned last week that Iran could be targeting US commercial ships, including oil tankers, travelling through the Middle East. One-fifth of the world's oil supply passes through the Strait of Hormuz, which lies between Iran and the Arabian Peninsula.

  • Transneft's Druzhba export pipeline has reportedly commenced clean-crude service this week, several weeks after flow was disrupted due to chloride contamination. Druzhba normally transports over 700,000 bbl/day of crude from eastern Russia to refineries in Slovakia, Hungary, the Czech Republic, Poland and Germany. Russia has dispatched tankers to affected customers, after the refineries were left scrambling for new feedstock.

  • ExxonMobil completed an expansion of its elastomers manufacturing plant in Wales, effectively doubling the plant’s capacity. The plant produces Santoprene™ thermoplastic elastomers, a lighter high-performance plastic used primarily in vehicles and consumer products.

Today’s notable acquisitions:

  • Equinor exercised its option to acquire an additional 22.45% interest in the Caesar Tonga oil field from a Shell subsidiary for US$965 million. Equinor’s stake increases from 23.6% to 46%.  Anadarko remains as operator, with a 33.8% interest, while Chevron holds the remaining 20.3%. Caesar Tonga is located 290 kms offshore New Orleans, producing about 80,000 boe/day.

  • Shell Midstream Partners (SHLX) has agreed to acquire Royal Dutch Shell’s 26% stake in the Explorer Pipeline Company and a 10.1% stake in the Colonial Pipeline Company for US$800 million. The acquisition increases SHLX’s share of Explorer to 38.6% and in Colonial to 16.1%. Explorer is a 660,000 bbl/day product pipeline while Colonial transports about 2.6 million bbl/day of product from Houston up the US Eastern Seaboard.

Today's notable first quarter earnings:

  • Ensign Energy Services reported a net loss of $22 million, down from a $27 million loss the same time last year. Revenues rose 72% to $445 million, due to its acquisition of Trinidad Drilling late last year. Ensign says volatile oil prices are causing companies to be cautious with their spending budgets this year. The company also says it expects to save $40 million annually as it integrates Trinidad's assets.

OIL PRICES - DAILY % CHANGE
WTI DIFFERENTIALS
STREAM CLOSE %CHG L 52WK H
BRENT$70.23▼0.650.47
 
86.29
WTI$61.04▼1.042.53
 
76.41
CDN LT$55.67▼1.120.83
 
69.32
C5+$56.82▼1.137.04
 
71.40
WCS$48.38▼1.312.59
 
56.30

CRUDE OIL FUTURES CURVES
BRENT
WTI
█ MAY 13   █ MAY 6   █ APR 29   █ APR 22   (USD/BBL)
MARKET OVERVIEW
MARKETS

CURRENCIES & YIELDS
    TSX SECTORS
52-WK
    SPX SECTORS
52-WK
ENERGY SECTORS

TSX ENERGY SUB-SECTORS

SPX ENERGY SUB-SECTORS
TSX ENERGY STOCKS
TSX BULLISH INDICATORS
TOP 5
Enbridge (ENB +1.8%)
Altagas (ALA +0.4%)
Inter Pipeline (IPL +0.1%)
TransCanada (TRP +0.1%)
Keyera (KEY +0%)
12-MO
HIGHS
None
TSX BEARISH INDICATORS
BOTTOM
5
CES Energy (CEU -5.8%)
Precision Drilling (PD -5%)
Nuvista Energy (NVA -4.4%)
Secure Energy (SES -4%)
TORC O&G (TOG -3.9%)
12-MO
LOWS
Husky Energy (HSE -2.2%)
Seven Generations (VII -2%)
COMPANY TICKER CLOSE %CHG L 52WK H CHART
INTEGRATED
Suncor EnergySU42.33▼-1.035.53
 
55.47D   W
Imperial OilIMO37.35▼-1.633.52
 
44.91D   W
Husky EnergyHSE13.12▼-2.213.10
 
22.99D   W
MIDSTREAM
EnbridgeENB50.30▲1.839.40
 
51.20D   W
TransCanadaTRP63.01▲0.162.03
 
63.69D   W
Pembina PipelinePPL47.53▼-0.239.15
 
50.65D   W
Inter PipelineIPL20.78▲0.118.60
 
25.66D   W
Keyera KEY31.26▲0.024.05
 
38.91D   W
Gibson EnergyGEI21.67▼-1.916.64
 
23.75D   W
LARGE CAP E&P
Cdn Natural ResCNQ36.64▼-3.530.11
 
49.08D   W
Cenovus EnergyCVE11.78▼-2.98.74
 
14.84D   W
EncanaECA8.62▼-2.66.90
 
18.54D   W
TourmalineTOU19.31▼-2.915.84
 
26.19D   W
Vermilion EnergyVET31.23▼-1.126.67
 
49.67D   W
SERVICES
Pason SystemsPSI19.47▼-1.817.18
 
24.57D   W
EnerflexEFX17.03▼-1.713.55
 
20.38D   W
Mullen Group MTL9.99▼-1.09.39
 
16.93D   W
ShawcorSCL18.58▼-1.815.11
 
28.89D   W
Secure EnergySES7.43▼-4.06.25
 
9.44D   W
REFINING & MARKETING
Parkland FuelPKI39.09▼-1.330.01
 
47.45D   W
S&P 500 ENERGY STOCKS
SPX BULLISH INDICATORS
TOP 5
None
12-MO
HIGHS
None
SPX BEARISH INDICATORS
BOTTOM
5
Ntl-Oilwell Varco (NOV -4.7%)
Marathon Petro (MPC -4.6%)
Devon Energy (DVN -4.4%)
Schlumberger (SLB -3.5%)
Apache (APA -3.5%)
12-MO
LOWS
Occidental Petro (OXY -1.5%)
Halliburton (HAL -2.8%)
Ntl-Oilwell Varco (NOV -4.7%)
Marathon Petro (MPC -4.6%)
COMPANY TICKER CLOSE %CHG L 52WK H CHART
INTEGRATED
Exxon MobilXOM75.71▼-1.164.65
 
87.36D   W
ChevronCVX120.44▼-1.3100.22
 
131.08D   W
MIDSTREAM
Kinder MorganKMI19.67▼-0.114.62
 
20.44D   W
Williams CoWMB27.24▼-1.120.36
 
32.22D   W
ONEOKOKE66.49▼-1.150.26
 
71.99D   W
LARGE CAP E&P
ConocoPhillipsCOP61.19▼-1.256.75
 
80.24D   W
EOG ResourcesEOG93.50▼-1.682.04
 
133.53D   W
Occidental PetroOXY54.17▼-1.553.51
 
87.67D   W
Anadarko PetroAPC72.77▼-0.440.40
 
76.70D   W
Pioneer Natural ResPXD147.22▼-3.0119.08
 
213.40D   W
SERVICES
SchlumbergerSLB38.16▼-3.534.99
 
75.43D   W
HalliburtonHAL24.65▼-2.824.33
 
54.91D   W
Baker HughesBHGE21.74▼-2.620.09
 
37.41D   W
Ntl-Oilwell VarcoNOV23.73▼-4.723.42
 
49.08D   W
TechnipFMCFTI22.04▼-3.418.20
 
34.39D   W
REFINERS
Marathon PetroMPC50.72▼-4.650.60
 
88.45D   W
Phillips 66PSX85.79▼-1.078.44
 
123.97D   W
Valero EnergyVLO81.41▼-2.868.81
 
126.98D   W
HollyFrontierHFC42.67▼-2.942.19
 
83.28D   W
NYSE ADRs
COMPANY TICKER CLOSE %CHG L 52WK H CHART
Royal Dutch ShellRDS.A63.38▼-0.355.04
 
73.86D   W
TotalTOT52.53▼-1.449.70
 
65.69D   W
BPBP41.23▼-0.736.28
 
47.83D   W
EniE32.21▼0.029.75
 
40.15D   W
EquinorEQNR20.92▼-0.919.95
 
28.93D   W
ANALYST RATINGS

UPGRADES

  • Andeavor Logistics (ANDX): Upgraded from Underperform to Neutral at Credit Suisse.

  • California Resources (CRC): Upgraded from Market Perform to Outperform at Raymond James.

  • C&J Energy Services (CJ): Upgraded from Neutral to Buy at Citigroup.

  • Kimbell Royalty Partners (KRP): Upgraded from Neutral to Outperform at Credit Suisse.

  • Royal Dutch Shell (RDS/A): Upgraded from Hold to Buy at HSBC and Deutsche Bank.

DOWNGRADES

  • Anadarko Petroleum (APC): Downgraded from Outperform to Neutral at Credit Suisse.

  • Buckeye Partners (BPL): Downgraded from Overweight to Equal Weight at Barclays.

  • ExxonMobil (XOM): Downgraded from Buy to Hold at HSBC.

  • Kinder Morgan Canada (KML.TO): Downgraded from Outperform to Sector Perform at RBC.

LATEST ENERGY NEWS

UPDATED: DAILY (END-OF-DAY)

SOURCES:
• OIL PRICES REFLECT NEAR MONTH CONTRACT FROM THE NYMEX/CME GROUP
• EQUITY PRICES PROVIDED BY NYSE & TMX GROUP
• CHARTPACKS COURTESY STOCKCHARTS.COM (DIVIDEND ADJUSTED)

NOTES:
• 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
Markets breathe a sigh of relief, sending oil prices and energy stocks higher

Markets breathe a sigh of relief, sending oil prices and energy stocks higher

Energy markets little moved on Friday, but log another loss for the week

Energy markets little moved on Friday, but log another loss for the week

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