Oil prices slide after Russia warns of excess global capacity
Today's energy market action:
After two consecutive days of gains late last week, oil prices moved lower on Monday, after Russia warned there's too much global supply capacity. Brent and WTI both slid about 1.5% for the day.
Canadian Light declined 1.7%, while Western Canadian Select (WCS) fell almost 2%, once again falling below US$40. Differentials to WTI were roughly unchanged.
Gasoline prices also gave back 0.5%, while Henry Hub edged up 0.9%.
Today's currency, treasury and equity market action:
Traders breathed a sigh of relief on Monday, after the US reversed plans to impose a 5% tariff on all imports from Mexico. Bond yields mostly moved higher on Monday, while the US dollar gained 0.2%. The loonie was little changed for the day.
The NYSE and DJIA both rose 0.3%. The S&P 500 Large Cap Index also moved up 0.5%. US markets were in offensive mode, with discretionary and technology stocks leading to the upside. Energy stocks gained a more modest 0.3%, as midstream stocks dragged to the downside.
In Toronto, the TSX dipped 0.1%, dragged lower by industrial, energy and precious metals stocks. The TSX energy sector declined 0.6%, reversing all of Friday's gains. All subsectors posted losses for the day.
Today's supply update:
Russia's finance minister spooked oil markets earlier in the day, warning prices could collapse to as low as US$30 a barrel, if OPEC and friends did not agree to extend curtailments. Russia has yet to decide whether or not it will extend its 10.8 million bbl/day production quota beyond June.
Saudi Arabia's energy minister says he continues to work with Russian counterparts to avoid a sharp decline in oil prices. OPEC+ plans to meet in Vienna on July 2, 2019.
China’s crude oil imports fell about 6% m/m to 40.2 million tonnes in May, blamed on refinery maintenance and a drop in Iranian imports.
Today's notable energy news:
After being taken offline last week due to encroaching forest fires, Canadian Natural Resources (CNRL) says it has since restarted production at both its Pelican Lake and Woodenhouse operations, restoring an estimated 65,000 bbl/day of output. The company says overall production volumes for the month of June will likely not be impacted, since any lost barrels were mitigated by boosting output at facilities that were curtailed under the province's production quotas.
Encana reminded shareholders that it has repurchased 10% of its outstanding shares so far this year (at a cost of $1.04 billion), and plans to buyback another $213 million of its shares beginning in July. The company also terminated its production sharing contract offshore China with CNOOC, effectively exiting the country. Encana averaged 320,000 bbl/day of liquids so far in the second quarter, up 10% from the previous quarter. Full year capital spending plans were left unchanged at about $2.8 billion. Full-year production guidance was also unchanged at 560,000 to 600,000 boe/day. Encana stock touched a 3-year low last week.
Devon Energy announced a voluntary plan to cut methane emissions across its US-operations. By 2025, the company says it plans to lower methane-intensity to a maximum of 0.28%, down from a current estimate of 0.32%.
Comstock Resources announced a deal to acquire privately-held Covey Park for about US$2.2 billion in cash and stock, including US$1.1 billion in debt. Covey Park is a natural gas player, operating primarily in the Haynesville shale basin.
Today's US pipeline update:
Phillips 66 and Plains All American Pipeline announced a new 50/50 joint-venture for construction of the Red Oak Pipeline system. Red Oak will transport 400,000 bbl/day of crude from Cushing and the Permian Basin to the Texas Gulf Coast. The line is expected to commence service in first quarter of 2021.
Phillips 66 and Bridger Pipeline also announced a 50/50 joint-venture to construct the US$1.6 billion Liberty Pipeline, which will run from the Rockies and Bakken regions to Cushing, Oklahoma. The 350,000 bbl/day pipeline is also expected to begin service in the first quarter of 2021.
|Suncor Energy||SU||40.30||▼-0.5||35.53||55.47||D W|
|Imperial Oil||IMO||36.26||▼-0.5||33.52||44.91||D W|
|Husky Energy||HSE||12.46||▼-0.1||12.27||22.99||D W|
|TC Energy||TRP||66.08||▼-0.8||47.90||66.93||D W|
|Pembina Pipeline||PPL||48.40||0.0||39.15||50.65||D W|
|Inter Pipeline||IPL||20.46||▲0.2||18.60||25.66||D W|
|Gibson Energy||GEI||22.27||▲0.3||16.90||23.75||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||35.62||▲0.3||30.11||49.08||D W|
|Cenovus Energy||CVE||10.98||▲0.4||8.74||14.84||D W|
|Vermilion Energy||VET||28.02||▼-1.5||26.67||49.67||D W|
|Pason Systems||PSI||18.69||▼-1.3||17.18||24.57||D W|
|Mullen Group||MTL||9.80||▼-0.1||9.39||16.93||D W|
|Secure Energy||SES||6.86||▼-1.6||6.25||9.44||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||42.61||▲1.0||31.16||47.45||D W|
|Exxon Mobil||XOM||74.91||▲0.4||64.65||87.36||D W|
|Kinder Morgan||KMI||20.88||▼-1.2||14.62||21.25||D W|
|Williams Co||WMB||27.48||▼-1.0||20.36||32.22||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||85.20||▲0.7||80.41||133.53||D W|
|Occidental Petro||OXY||47.90||▲0.1||47.00||86.76||D W|
|Anadarko Petro||APC||70.07||▲0.0||40.40||76.70||D W|
|Pioneer Natural Res||PXD||144.73||▼-0.2||119.08||196.38||D W|
|Baker Hughes||BHGE||23.41||▲0.4||20.09||35.55||D W|
|Ntl-Oilwell Varco||NOV||20.98||▲0.7||20.14||49.08||D W|
|Marathon Petro||MPC||47.68||▲1.5||45.47||88.45||D W|
|Phillips 66||PSX||85.90||▲0.4||78.44||123.97||D W|
|Valero Energy||VLO||75.86||▲1.5||68.81||122.42||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
• CHARTPACKS COURTESY STOCKCHARTS.COM (DIVIDEND ADJUSTED)
• 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