Oil prices continue to rally, as markets recover losses from Monday's meltdown
Today's energy market action:
Despite another increase in US crude inventories, oil prices creeped higher again on Wednesday. Brent gained 0.7% while WTI rose 0.4%.
Canadian benchmarks rose in tandem with the US benchmark. Differentials on Canadian crude widened slightly, ending the day at US$5.63 for Canadian Light and almost US$13 a barrel for WCS, the highest since mid-February.
Today's treasury, currency and equity market action:
Higher gas prices helped boost Canada’s annual inflation rate from 1.9% in March to 2.0% in April. Gas prices are up 10% m/m, due in part to new carbon levies introduced in six provinces. Natural gas prices are also up over 10% from the same time last year.
In currency markets, the British pound sank to a 3-month low on news of yet another Brexit vote in June. The Aussie dollar continues to sink, headed back to the lows of early 2016. The US dollar was little changed. The loonie gained just over 0.1% for the day.
Bond yields all moved lower on Wednesday, including the German 10-year, which fell to -0.10%, the lowest since fall 2016.
US markets rallied again on Wednesday, recovering all losses from Monday's mini-meltdown. The NASDAQ was today's big winner, rising over 1%. The NYSE rose 0.3%, while the broader S&P 500 index rose 0.6%. The TSX gained 0.2%.
The SPX energy basket gained 0.5%, while TSX energy was roughly unchanged. All subsectors posted gains for the day, except for E&Ps, which were little moved on Wednesday.
Today's supply/demand update:
According to the Energy Information Administration (EIA), US crude stockpiles rose by 5.4 million barrels last week, including a 1.8 million barrel increase at the Cushing storage hub in Oklahoma. Total crude output slid to 12.1 million bbl/day, down from a record 12.3 million bbl/day at the beginning of the month.
The International Energy Agency (IEA) tweaked its world oil demand to 100.4 million bbl/day for 2019. Global oil supply declined to 99.3 million bbl/day in April, down 300,000 bbl/day from the previous month, due to cutbacks from Canada, Iran, Kazakhstan and Azerbaijan. Libya, Nigeria and Iraq added to OPEC's production last month, bringing the cartel's estimated output to 30.2 million bbl/day. The IEA says rising US production is more than enough to offset further declines expected from Venezuela and Iran.
According to Reuters, Venezuela has stopped upgrading extra-heavy Orinoco crude due to a lack of buyers. US sanctions have left the country unable to export its crude, forcing barrels into storage tanks, which have now become full. According to state-owned PDVSA, the upgraders have been placed into recirculation mode. PDVSA operates four upgraders in Venezuela, three owned jointly with Chevron, Total, Equinor and Rosneft.
Today's other notable energy news:
Woodfibre LNG announced the purchase of privately-held Canbriam Energy, an E&P firm focused in BC's Montney region. A final investment decision on the LNG terminal is expected by this summer, with start-up currently planned for 2023. The terminal is located in Squamish, BC, and already has approvals in place to export 2.1 million t/y or 40 years. Woodfibre LNG is a subsidiary of Pacific Oil and Gas, which is owned by Singapore's RGE Group.
Warren Buffett's Berkshire Hathaway cut its stake in Phillips 66 to 5.6 million shares at the end of the first quarter, about half the previous quarter. Billionaire Seymour Schulich also announced the purchase of more Pengrowth Energy shares, bringing his total stake to 165 million shares, representing approximately 30% of the company's public float.
Today's notable first quarter earnings:
Birchcliff Energy posted a $16.9 million profit for the first quarter, up 2% y/y. Revenues rose 12% to $178 million. Quarterly production averaged 74,884 boe/day, down 2% y/y. Full year guidance was left unchanged at 77,000 boe/day.
Bellatrix Exploration posted a $19 million loss for the first quarter, up from a $13 million loss for the same quarter last year. Revenues rose 3% to $68.5 million. Production averaged 36,991 boe/day, while 2019 guidance was left unchanged at 34,000 to 36,000 boe/day.
|Suncor Energy||SU||43.15||▲0.4||35.53||55.47||D W|
|Imperial Oil||IMO||37.82||▲0.1||33.52||44.91||D W|
|Husky Energy||HSE||13.55||▲1.9||13.10||22.99||D W|
|Pembina Pipeline||PPL||48.09||▲0.8||39.15||50.65||D W|
|Inter Pipeline||IPL||20.69||▲0.1||18.60||25.66||D W|
|Gibson Energy||GEI||22.51||▲0.5||16.64||23.75||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||37.32||▼-0.5||30.11||49.08||D W|
|Cenovus Energy||CVE||11.86||▼-1.7||8.74||14.84||D W|
|Vermilion Energy||VET||31.36||▼-0.2||26.67||49.67||D W|
|Pason Systems||PSI||19.74||▲0.2||17.18||24.57||D W|
|Mullen Group||MTL||10.17||▲1.3||9.39||16.93||D W|
|Secure Energy||SES||7.47||▼-1.1||6.25||9.44||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||39.77||▼-0.3||30.01||47.45||D W|
|Exxon Mobil||XOM||76.37||▲0.7||64.65||87.36||D W|
|Kinder Morgan||KMI||20.14||▲1.1||14.62||20.44||D W|
|Williams Co||WMB||27.71||▲0.8||20.36||32.22||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||94.36||▲0.0||82.04||133.53||D W|
|Occidental Petro||OXY||54.25||▼-0.6||53.12||87.67||D W|
|Anadarko Petro||APC||72.87||▼-0.1||40.40||76.70||D W|
|Pioneer Natural Res||PXD||151.49||▲0.8||119.08||213.40||D W|
|Baker Hughes||BHGE||22.74||▲2.1||20.09||37.41||D W|
|Ntl-Oilwell Varco||NOV||24.71||▲1.4||23.42||49.08||D W|
|Marathon Petro||MPC||51.19||▲0.8||50.19||88.45||D W|
|Phillips 66||PSX||87.30||▲0.4||78.44||123.97||D W|
|Valero Energy||VLO||83.37||▲0.5||68.81||126.98||D W|
Hess (HES): Upgraded from Underweight to Equal Weight at Capital One.
PBF Energy (PBF): Upgraded from Neutral to Outperform at Credit Suisse.
Buckeye Partners (BPL): Downgraded from Buy to Neutral at UBS.
UPDATED: DAILY (END-OF-DAY)
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• OIL PRICES, FUTURES AND DIFFERENTIALS IN USD/BBL
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