Markets breathe a sigh of relief, sending oil prices and energy stocks higher
Today's energy market action:
A softer stance from President Trump comforted markets on Tuesday, sending stocks and commodities higher.
Brent rose 1.4%, while WTI and WCS gained 1.2%. Canadian Light added 0.9%, as the discount to WTI widened slightly.
The American Petroleum Institute is forecasting an 8.6 million barrel build in US crude stockpiles for last week. Official numbers from the Energy Information Administration are due to be released Wednesday morning.
Today's treasury, currency and equity market action:
US treasuries and the Japanese yen gave back some of yesterday's gains, as traders turned to riskier assets. The pound and Euro also dipped slightly, helping the greenback rise 0.2%.
US equity markets all gained about 1%, including the NYSE and S&P 500. Except for rate-sensitive utility stocks, all other sectors ended the day in the green. Energy rose 1.1%, with oilfield services stocks posting the biggest gains.
In Toronto, the TSX rose 0.6%, including a 2.1% increase among Canadian energy names.
Today's supply/demand update from OPEC:
In its May Monthly Oil Market Report, OPEC kept its crude supply, demand and economic growth forecasts roughly unchanged from the previous month. The cartel says its members produced about 30.0 million bbl/day in April, also unchanged from the previous month.
OECD commercial oil stockpiles remain stubbornly high, rising by 3.3 million barrels in March, to 2.88 billion barrels. Despite OPEC's aggressive production cuts, crude inventories remain 20.3 million barrels above the 5-year average.
Non-OPEC free cash flow (FCF) was estimated to have hit a record high of US$310 billion in 2018, double the previous year. Despite soft oil prices in the latter half of the year, OPEC says companies benefited from lower capital spending and a decline in operating costs. A slight drop is expected for this year, but FCF is expected to reach a record high of US$324 billion in 2020.
About US$390 billion in greenfield and brownfield projects are expected to be sanctioned this year (ex-OPEC), rising to US$468 billion in 2020.
Today's other notable energy news:
Keyera Corp and SemCAMS Midstream have partnered up to build the Key Access Pipeline System (KAPS), an NGL and condensate pipeline designed to transport production from the Montney and Duvernay region in northwestern Alberta to the Fort Saskatchewan area, just north of Edmonton. KAPS is expected to be operational sometime in the first half of 2022. The new JV between Keyera and SemCAMS replaces the arrangement between Keyera and Wolf Midstream. SemCAMS Midstream is owned by SemGroup Corp and private-equity firm KKR.
Keyera also announced a sulphur handling project with a "major" oil sands producer at its South Cheecham Terminal, owned jointly with Enbridge. The project is back by a 100% take-or-pay contract, beginning in 2022.
After having two of its crude carriers attacked yesterday, two Saudi oil pumping stations were hit by drones packed with explosives on Tuesday, sparking a fire. The country accuses Iran of being behind both attacks, although no groups have claimed responsibility so far. Saudi Aramco temporarily shut its East-West pipeline, but says output has not been affected.
The government of Mozambique has approved ExxonMobil's planned Rovuma LNG project, located on the Afungi peninsula. The facility was approved for up to 15 million t/yr of LNG, split into two trains. The gas will be sourced from a deepwater offshore field, estimated to contain 85 trillion cubic feet of natural gas. Exxon will lead construction and operation of the LNG facility, while partner Eni will lead construction and operation of the gas field. Romuva LNG is located near Anadarko's 13 million t/yr Mozambique LNG facility, which is expected to be sanction before the summer.
Today's notable first quarter earnings:
Keyera Corp reported a $33.8 million profit for the first quarter, down 61% from the same time last year, due in part to an outage of its Alberta EnviroFuels Facility. Funds from operations rose 9% to $224 million. Natural gas processing volumes reached a record 1.6 MMcf/day.
|Suncor Energy||SU||42.98||▲1.5||35.53||55.47||D W|
|Imperial Oil||IMO||37.77||▲1.1||33.52||44.91||D W|
|Husky Energy||HSE||13.30||▲1.4||13.10||22.99||D W|
|Pembina Pipeline||PPL||47.73||▲0.4||39.15||50.65||D W|
|Inter Pipeline||IPL||20.68||▼-0.5||18.60||25.66||D W|
|Gibson Energy||GEI||22.39||▲3.3||16.64||23.75||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||37.52||▲2.4||30.11||49.08||D W|
|Cenovus Energy||CVE||12.06||▲2.4||8.74||14.84||D W|
|Vermilion Energy||VET||31.42||▲0.6||26.67||49.67||D W|
|Pason Systems||PSI||19.70||▲1.2||17.18||24.57||D W|
|Mullen Group||MTL||10.04||▲0.5||9.39||16.93||D W|
|Secure Energy||SES||7.55||▲1.6||6.25||9.44||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||39.89||▲2.1||30.01||47.45||D W|
|Exxon Mobil||XOM||75.81||▲0.1||64.65||87.36||D W|
|Kinder Morgan||KMI||19.93||▲1.3||14.62||20.44||D W|
|Williams Co||WMB||27.48||▲0.8||20.36||32.22||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||94.34||▲0.9||82.04||133.53||D W|
|Occidental Petro||OXY||54.55||▲0.7||53.51||87.67||D W|
|Anadarko Petro||APC||72.96||▲0.2||40.40||76.70||D W|
|Pioneer Natural Res||PXD||150.35||▲2.1||119.08||213.40||D W|
|Baker Hughes||BHGE||22.28||▲2.5||20.09||37.41||D W|
|Ntl-Oilwell Varco||NOV||24.38||▲2.7||23.42||49.08||D W|
|Marathon Petro||MPC||51.31||▲1.2||50.60||88.45||D W|
|Phillips 66||PSX||86.92||▲1.3||78.44||123.97||D W|
|Valero Energy||VLO||82.96||▲3.0||68.81||126.98||D W|
China Petroleum & Chemical (SNP): Upgraded from Neutral to Buy at Citigroup.
PetroChina (PTR): Upgraded from Neutral to Buy at Goldman Sachs.
Valero Energy (VLO): Upgraded from Neutral to Overweight at JPMorgan Chase.
Weatherford International (WFT): Downgraded from Outperform to Neutral at Credit Suisse.
UPDATED: DAILY (END-OF-DAY)
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