Traders flee stocks and commodities as US/China trade relations deteriorate

Traders flee stocks and commodities as US/China trade relations deteriorate

Today's energy market update:

  • Traders moved into defensive mode again on Tuesday, as US/China trade talks appear to be going nowhere.

  • Brent declined almost 2%, falling below US$70 for the first time since early April. WTI also fell 1.4%.

  • Canadian Light declined 1.6%, while WCS dropped over 2% as the heavy oil discount widened to almost US$12.50 per barrel.

  • Gasoline sank another 2.4%, falling to a 4-week low of US$1.95 a gallon. Heating oil also lost 1.5% for the day.

Today's currency and equity market update:

  • US officials moved closer to imposing a 25% tariff on US$200 billion in Chinese imports on Friday, up from a current rate of 10%. The US imported about US$540 billion from China in 2018, but exported just US$120 billion. Negotiations are expected to continue over the next few days.

  • The news sent funds flowing out of equities and into treasuries and the Japanese yen. The yen rose another 0.4% on Tuesday, while the US dollar also gained 0.1%.

  • US markets all declined about 2%, the steepest drop since January. The NYSE fell 1.5% while the NASDAQ posted a 2% loss. The S&P 500 fell 1.7%, with all sectors posting losses for the day, including a 0.6% decline in energy stocks.

  • In Toronto, the TSX tumbled almost 1%. The TSX energy sector declined 1.3%.

  • Except for US midstream stocks, most energy subsectors ended the day lower.

Today's supply/demand update:

  • According to the American Petroleum Institute, crude stockpiles are expected to have increased by almost 3 million barrels last week. Official numbers from the Energy Information Administration (EIA) are due to be released Wednesday morning.

  • The EIA once again tweaked its 2019 and 2020 US crude production forecasts, revised higher by 0.5% and 2.2%, respectively. Total US output is now expected to average 12.45 million bbl/day in 2019, rising to 13.38 million bbl/day next year. 

Today's other notable energy news:

  • The government of Iraq is poised to announce an US$53 billion agreement with ExxonMobil and PetroChina, to help boost oil output over the next 30 years. The two oil majors have agreed to increase output from Iraq’s southern oilfields by about 375,000 bbl/day and improve the country's pipeline capacity. The Iraqi government says the deal is unrelated to the recent reinstatement of US sanctions on Iran.

  • According to Bloomberg, Saudi Aramco is considering a major investment in Equinor's US shale gas operations, particularly in the Marcellus shale region. The move is reportedly intended to help Aramco diversify away from crude sales, and potentially secure more gas for domestic power consumption.

  • Permian producer Pioneer Natural Resources is looking to offload about one-third of its executives, as part of a plan to save US$100 million annually in overhead costs. The voluntary and involuntary staff reductions should be completed by the end of this month. 

  • TechnipFMC was awarded an EPC and installation (EPCI) contract for BP's recently sanctioned expansion of its Thunder Horse platform in the US Gulf of Mexico. This is Technip's second EPCI contract from BP in the region.

Today's notable first quarter earnings:

  • Bonterra Energy posted a first quarter profit of $1.6 million, down 57% from the first quarter of last year. Revenues also declined 13% to $50 million. First quarter production fell 9% y/y to 12,020 boe/day, blamed on extreme cold weather conditions and the timing of new wells. The company hopes to exit 2019 closer to 14,000 boe/day, weighted about two-thirds light sweet crude.

  • Peyto Exploration posted a $25 million profit for the first quarter, about half the same time last year. Output averaged 87,703 boe/day, down 16% y/y. Funds from operations declined 30% to $103 million due to lower production and lower commodity prices. Revenues also declined 24% to $152 million.

  • NuVista Energy reported a net loss of $36 million in Q1, versus a $22 million profit for the same time last year. Production averaged 43,840 boe/day, up 21% y/y, while funds from operations rose 13% y/y to $72 million.

  • Plains All American reported a net profit of US$970 million in the first quarter, up from US$288 million for the same time last year. Revenues were little changed at US$8.4 billion, while operating income more than doubled to US$714 million.

  • Pioneer Natural Resources posted a net profit of US$350 million, double the same time last year. Revenues rose 12% y/y to US$2.4 billion. Permian production averaged 320,000 boe/day in Q1, weighted 63% oil. Total production rose 7% to 333,430 boe/day. Pioneer also says it is looking to divest its gas processing midstream assets.

  • Midstream player Targa Resources posted a net loss of US$39 million, almost double the same time last year. Revenues declined 6% to US$2.3 billion.

  • Columbian energy major Ecopetrol posted a first quarter profit of US$848 million, up 5% y/y. The company averaged 729,000 boe/day in Q1, on the upper end of guidance.

OIL PRICES - DAILY % CHANGE
WTI DIFFERENTIALS
STREAM CLOSE %CHG L 52WK H
BRENT$69.88▼1.950.47
 
86.29
WTI$61.40▼1.442.53
 
76.41
CDN LT$56.45▼1.620.83
 
69.32
C5+$57.25▼1.437.04
 
71.40
WCS$48.97▼2.212.59
 
56.30

CRUDE OIL FUTURES CURVES
BRENT
WTI
█ MAY 7   █ APR 30   █ APR 23   █ APR 16   (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
Kelt Exploration (KEL +1%)
Secure Energy (SES +0.7%)
Mullen Group (MTL +0.5%)
Birchcliff Energy (BIR 0%)
12-MO
HIGHS
None
TSX BEARISH INDICATORS
BOTTOM
5
Gran Tierra (GTE -5.8%)
Nuvista Energy (NVA -5.6%)
CES Energy (CEU -4.6%)
TORC O&G (TOG -4.5%)
Crescent Point (CPG -4.4%)
12-MO
LOWS
CES Energy (CEU -4.6%)
Seven Generations (VII -4%)
COMPANY TICKER CLOSE %CHG L 52WK H CHART
INTEGRATED
Suncor EnergySU42.95▼-0.435.53
 
55.47D   W
Imperial OilIMO38.11▼-1.033.52
 
44.91D   W
Husky EnergyHSE13.66▼-1.513.21
 
22.99D   W
MIDSTREAM
EnbridgeENB49.29▼-0.239.40
 
51.20D   W
TransCanadaTRP62.80▼-0.447.90
 
64.46D   W
Pembina PipelinePPL47.20▼-0.739.15
 
50.65D   W
Inter PipelineIPL21.05▼-1.118.60
 
25.66D   W
Keyera KEY30.56▼-0.124.05
 
38.91D   W
Gibson EnergyGEI21.49▼-1.016.64
 
23.75D   W
LARGE CAP E&P
Cdn Natural ResCNQ37.29▼-1.030.11
 
49.08D   W
Cenovus EnergyCVE11.97▼-2.28.74
 
14.84D   W
EncanaECA9.19▼-0.36.90
 
18.54D   W
TourmalineTOU19.21▼-0.915.84
 
26.19D   W
Vermilion EnergyVET30.90▼-3.526.67
 
49.67D   W
SERVICES
Pason SystemsPSI20.38▼-0.517.18
 
24.57D   W
EnerflexEFX17.00▼-0.113.55
 
20.38D   W
Mullen Group MTL9.80▲0.59.39
 
16.93D   W
ShawcorSCL19.24▼-1.015.11
 
28.89D   W
Secure EnergySES7.61▲0.76.25
 
9.44D   W
REFINING & MARKETING
Parkland FuelPKI40.30▼-3.430.01
 
47.45D   W
S&P 500 ENERGY STOCKS
SPX BULLISH INDICATORS
TOP 5
Occidental Petro (OXY +1.6%)
Kinder Morgan (KMI +0.6%)
EOG Resources (EOG +0.6%)
Williams Co (WMB +0.5%)
Anadarko Petro (APC +0.4%)
12-MO
HIGHS
None
SPX BEARISH INDICATORS
BOTTOM
5
Pioneer Natural Res (PXD -5.3%)
Baker Hughes (BHGE -3.1%)
Halliburton (HAL -2.5%)
Diamondback (FANG -2.5%)
Valero Energy (VLO -2.4%)
12-MO
LOWS
HollyFrontier (HFC +0.1%)
COMPANY TICKER CLOSE %CHG L 52WK H CHART
INTEGRATED
Exxon MobilXOM76.72▼-0.664.65
 
87.36D   W
ChevronCVX118.27▼-0.1100.22
 
131.08D   W
MIDSTREAM
Kinder MorganKMI19.56▲0.614.62
 
20.44D   W
Williams CoWMB27.52▲0.520.36
 
32.22D   W
ONEOKOKE66.33▲0.250.26
 
71.99D   W
LARGE CAP E&P
ConocoPhillipsCOP61.00▼-1.456.75
 
80.24D   W
EOG ResourcesEOG91.78▲0.682.04
 
133.53D   W
Occidental PetroOXY59.69▲1.656.83
 
87.67D   W
Anadarko PetroAPC75.82▲0.440.40
 
76.70D   W
Pioneer Natural ResPXD147.97▼-5.3119.08
 
213.40D   W
SERVICES
SchlumbergerSLB40.60▼-1.634.99
 
75.43D   W
HalliburtonHAL26.94▼-2.524.70
 
54.91D   W
Baker HughesBHGE23.21▼-3.120.09
 
37.76D   W
Ntl-Oilwell VarcoNOV25.35▼-1.424.04
 
49.08D   W
TechnipFMCFTI22.81▼-1.818.20
 
34.39D   W
REFINERS
Marathon PetroMPC59.43▼-0.154.29
 
88.45D   W
Phillips 66PSX86.55▼-0.578.44
 
123.97D   W
Valero EnergyVLO84.36▼-2.468.81
 
126.98D   W
HollyFrontierHFC45.47▲0.143.73
 
83.28D   W
NYSE ADRs
COMPANY TICKER CLOSE %CHG L 52WK H CHART
Royal Dutch ShellRDS.A62.23▼-2.955.04
 
73.86D   W
TotalTOT52.47▼-2.849.70
 
65.69D   W
BPBP42.22▼-1.736.28
 
47.83D   W
EniE32.50▼-2.429.75
 
40.15D   W
EquinorEQNR21.28▼-0.919.95
 
28.93D   W
ANALYST RATINGS

UPGRADES

  • None

DOWNGRADES

  • Anadarko Petroleum (APC): Downgraded from Buy to Hold at Stifel Nicolaus.

  • ENI (E): Downgraded from Buy to Neutral at Citigroup.

  • Total (TOT): Downgraded from Buy to Neutral at Citigroup.

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
Falling crude stockpiles and record Chinese demand give energy commodities a boost

Falling crude stockpiles and record Chinese demand give energy commodities a boost

Oil markets little moved as traders await results of US/China trade talks

Oil markets little moved as traders await results of US/China trade talks

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