Slowing global growth and rising US crude inventories send energy markets lower
Today’s energy market action:
A rather gloomy economic forecast from the OECD and rising crude stockpiles in the US dragged equity markets and energy commodities lower on Wednesday.
Canadian Light declined over 4% as its discount to WTI widened by US$0.85 to over $8 a barrel, the highest since mid-December. The discount for Edmonton Condensate (C5+) also widened by US$0.75 to US$6.40. The Canadian heavy oil discount held steady at US$15.75.
Gasoline and heating oil both declined 1.5%, while Henry Hub natural gas prices fell 2.7%.
Today's notable economic data:
The OECD warned global economic growth will slow to 3.2% this year, down from over 3.5% in 2018, blamed squarely on a major slowdown in global trade. The OECD says trade wars between the US, China and the EU has stifled investment and weakened the global manufacturing sector. The agency also warned of spiralling debt-levels and slowing growth out of China, which is expected to take a heavy toll on global growth in the coming years.
In its latest release of meeting minutes, the US Federal Reserve showed little interest in raising rates anytime in the near future. US bond yield mostly dipped lower for the day, while the US dollar was roughly unchanged.
According to Statistics Canada, retail sales rose 1.1% m/m to $51.3 billion in March, due in part to a 6% jump in gasoline sales. The Canadian dollar dipped 0.2%, ending the day below 74.50 cents.
Today's equity market action:
North American equity markets all ended the day lower. The Dow Jones Industrial Average fell 100 points (-0.4%) while the S&P 500 dipped 0.3%. In Toronto, the TSX declined 0.6%.
Markets were in defensive mode on Wednesday, with staples and utilities stocks leading to the upside. Energy was the worst performing sector on both sides of the border, falling 1.6% in the US and 2.7% in Canada.
Today's notable energy news:
Crude stockpiles in the US unexpectedly rose 4.7 million barrels last week, with most of the gains seen in the Gulf Coast and Midwest, including a 1.3 million barrel increase at the Cushing storage terminal. Refinery utilization fell below 90%, mostly due to a big drop in the Midwest region.
Sempra Energy struck a 20-year deal with Saudi Aramco to supply 5 million t/y of LNG from its Port Arthur export terminal, currently under development in Texas. Aramco may also take a 25% stake in the project. Phase 1 of the terminal has two trains with a total liquefaction capacity of 11 million t/y, with plans to expand to 45 million t/y.
Sempra also made a request to extend the start date for its US$10 billion Cameron LNG facility in Louisiana. Federal regulators approved the project in June 2014, contingent on a 2019 start-up. Although the first train has already been put into service, the remaining two trains will be delayed to next year.
South Africa's Sasol warned its Lake Charles plastics plant will cost US$1 billion more than previous estimates, now forecasted at just under US$13 billion. The facility converts natural gas into ethylene, used for plastics production. The plant had an initial price tag of US$8.9 billion in 2014.
A 3.4 magnitude quake in the northern Dutch province of Groningen has renewed calls to shutdown production from an offshore gas field. Output from the Groningen gas field has already been significantly curtailed due to seismic activity, which resulted in major property damage. The Dutch government has already called for output to be cut in half by 2022, and will consider ending operations by 2030, if alternative sources of gas can be found. The field is operated by NAM, a joint venture between ExxonMobil and Royal Dutch Shell.
Suncor Energy announced plans to issue $750 million in unsecured notes, dated 2029 and yielding 3.1%. The company says net proceeds will be use to refinance or repay existing debt.
Secure Energy Services was approved to buyback up to 8 million shares over the next 12 months, representing 5% of current public float. This is in addition to its current buyback program for 8.2 million shares, which expires at the end of May.
|Suncor Energy||SU||42.88||▼-2.6||35.53||55.47||D W|
|Imperial Oil||IMO||37.56||▼-0.8||33.52||44.91||D W|
|Husky Energy||HSE||12.90||▼-3.7||12.85||22.99||D W|
|Pembina Pipeline||PPL||48.85||▼-0.1||39.15||50.65||D W|
|Inter Pipeline||IPL||20.75||▼-0.3||18.60||25.66||D W|
|Gibson Energy||GEI||23.25||▲0.3||16.76||23.75||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||36.02||▼-1.8||30.11||49.08||D W|
|Cenovus Energy||CVE||11.48||▼-2.2||8.74||14.84||D W|
|Vermilion Energy||VET||29.97||▼-2.7||26.67||49.67||D W|
|Pason Systems||PSI||19.65||▼-1.4||17.18||24.57||D W|
|Mullen Group||MTL||10.16||▼-0.2||9.39||16.93||D W|
|Secure Energy||SES||7.28||▼-4.1||6.25||9.44||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||40.95||▲0.2||30.01||47.45||D W|
|Exxon Mobil||XOM||75.56||▼-0.9||64.65||87.36||D W|
|Kinder Morgan||KMI||20.34||0.0||14.62||20.57||D W|
|Williams Co||WMB||27.63||▼-0.9||20.36||32.22||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||92.91||▼-2.8||82.04||133.53||D W|
|Occidental Petro||OXY||52.78||▼-1.4||52.47||87.67||D W|
|Anadarko Petro||APC||72.31||▼-0.6||40.40||76.70||D W|
|Pioneer Natural Res||PXD||153.15||▼-3.0||119.08||210.46||D W|
|Baker Hughes||BHGE||23.36||▼-1.1||20.09||37.07||D W|
|Ntl-Oilwell Varco||NOV||23.13||▼-4.0||22.63||49.08||D W|
|Marathon Petro||MPC||51.92||▼-2.5||50.19||88.45||D W|
|Phillips 66||PSX||85.60||▼-0.7||78.44||123.97||D W|
|Valero Energy||VLO||80.35||▼-2.6||68.81||126.98||D W|
Diamond Offshore Drilling (DO): Upgraded from Underweight to Neutral at Piper Jaffray.
UPDATED: DAILY (END-OF-DAY)
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