Canadian crude benchmarks get a lift as differentials narrow
Today's energy market action:
Global oil prices reversed some of yesterday's gains, as trade war tensions continue to trickle through global markets.
Brent declined 0.9% while WTI fell 0.6%. Heating oil and gasoline prices also gave back about 1%.
Canadian Light and WCS rose 0.5% and 1.1%, respectively, as their discounts to WTI narrowed.
The American Petroleum Institute is forecasting a 5.3 million barrel decline in US crude stockpiles for last week, while gasoline stockpiles are expected to have risen by almost 3 million barrels. Official numbers from the Energy Information Administration are due to be released Thursday morning.
Today's currency and equity market action:
The Bank of Canada kept interest rates unchanged at 1.75%, and warned the economy likely slowed in the first quarter, but will improve in Q2 due to a recovery in the oil sector, stability in the housing market and strong labour growth. The loonie declined another 0.2% on Wednesday, ending the day below 74 cents for the first time since January.
The US dollar gained another 0.2% for the day, ending Wednesday at a two-year high.
US markets posted a second consecutive day of losses, including a 0.6% drop in the NYSE and 0.7% decline in the S&P 500. All SPX sectors ended the day in negative territory, including a 0.6% decline in energy stocks.
Toronto's TSX fell 1%, with most sectors also posting losses for the day. Energy stocks bucked the downtrend, rising 1.2% thanks to decent gains posted by larger-cap Canadian producers.
Today's notable energy news:
Canadian Natural Resources (CNRL) struck a deal to purchase Devon Energy's Canadian assets for $3.775 billion, adding another 125,000 bbl/day of mostly heavy oil to its production portfolio. The deal will be fully financed by a $3.25 billion loan and is expected to close by the end of June.
Devon Energy says the divestiture of its Canadian assets allows it to reduce debt and focus on its core oil holdings in the US. The company is also looking to sell its Barnett Shale gas assets in North Texas, and says it expects to announce a buyer before the end of the year.
Junior producer Connacher Oil and Gas posted a surprise first quarter profit of $3.3 million, due to higher oil prices and a forfeited deposit from a failed buyout offer. Production volumes out of Great Divide property declined 15% to 10,754 bbl/day due to voluntary cutbacks late last year. The company says it is working towards restoring output, while it continues to sit under creditor protection.
Tourmaline Oil Corp announced plans to trim its five-year capital spending plans by $430 million, but maintained its production targets and cash flow. The company says growth capital will be focused primarily in BC's Montney region.
Speaking at the company's annual meeting in Dallas today, ExxonMobil CEO Darren Woods says his company is on track to produce 5 million boe/day and double cash from operations by 2025, assuming US$60 WTI. Most of the new output is expected to come from the Permian region, Guyana and offshore Brazil.
Altus Midstream has exercised its option to purchase 27% stake in the Permian Highway Pipeline for about US$161 million. The US$2.1 billion pipeline will transport 2.1 Bcf/day of natural gas from the Waha area to Katy, Texas, and is said to be be fully subscribed. The line is expected to be put into service in October 2020, and is jointly owned by Kinder Morgan and EagleClaw Midstream Ventures.
About 200 Norwegian offshore oil and gas workers have threatened strike action on June 4, as negotiations continue with their respective employers, including Equinor, BP and ConocoPhillips. The strike would affect 7 offshore fields, potentially taking over 100,000 boe/day offline.
Ratings agency Fitch upgraded Kinder Morgan's debt rating from "BBB-" to "BBB", and revised its outlook from Positive to Stable. Fitch says the midstream firm has economy of scale, stable cash flow and an improved balance sheet.
|Suncor Energy||SU||42.28||▲0.1||35.53||55.47||D W|
|Imperial Oil||IMO||36.90||▲0.3||33.52||44.91||D W|
|Husky Energy||HSE||12.86||▲2.4||12.31||22.99||D W|
|TC Energy||TRP||65.60||▼-1.6||47.90||66.93||D W|
|Pembina Pipeline||PPL||48.15||▼-1.4||39.15||50.65||D W|
|Inter Pipeline||IPL||21.02||▲0.9||18.60||25.66||D W|
|Gibson Energy||GEI||22.26||▼-0.7||16.76||23.75||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||36.81||▲3.8||30.11||49.08||D W|
|Cenovus Energy||CVE||11.32||▲1.1||8.74||14.84||D W|
|Vermilion Energy||VET||29.65||▼-0.5||26.67||49.67||D W|
|Pason Systems||PSI||19.06||▼-2.5||17.18||24.57||D W|
|Mullen Group||MTL||9.96||▼-1.2||9.39||16.93||D W|
|Secure Energy||SES||6.96||▼-2.7||6.25||9.44||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||40.50||▼-1.8||30.26||47.45||D W|
|Exxon Mobil||XOM||72.16||▼-0.6||64.65||87.36||D W|
|Kinder Morgan||KMI||19.91||▲0.2||14.62||20.57||D W|
|Williams Co||WMB||26.30||▼-0.3||20.36||32.22||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||86.43||▼-0.9||82.04||133.53||D W|
|Occidental Petro||OXY||52.00||▼-0.6||51.04||87.67||D W|
|Anadarko Petro||APC||71.34||▼-0.2||40.40||76.70||D W|
|Pioneer Natural Res||PXD||146.59||▼-0.9||119.08||198.61||D W|
|Baker Hughes||BHGE||21.70||▼-2.1||20.09||36.42||D W|
|Ntl-Oilwell Varco||NOV||21.66||▼-1.1||21.22||49.08||D W|
|Marathon Petro||MPC||48.99||▼0.0||48.02||88.45||D W|
|Phillips 66||PSX||82.75||▲0.3||78.44||123.97||D W|
|Valero Energy||VLO||74.86||▼-0.3||68.81||126.98||D W|
UPDATED: DAILY (END-OF-DAY)
• OIL PRICES REFLECT NEAR MONTH CONTRACT FROM THE NYMEX/CME GROUP
• EQUITY PRICES PROVIDED BY NYSE & TMX GROUP
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• OIL PRICES, FUTURES AND DIFFERENTIALS IN USD/BBL
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