Renewed tensions in the Middle East give oil prices a boost, at least for now
Today's energy market update:
Another pair of tanker attacks in the Middle East sparked a small rally in oil prices on Thursday. Brent and WTI both rose 2.2%, reversing some of yesterday's declines.
Canadian Light and Edmonton Condensate rose 3%, while WCS moved up 3.6%. Discounts to WTI all narrowed slightly on Thursday.
Today's currency and equity market update:
The US dollar was unchanged while the loonie edged up 0.1%, moving back above 75 cents.
US markets moved up slightly on Thursday. The NYSE gained 0.3%, while the NASDAQ rose 0.6%. The S&P 500 and DJIA both gained 0.4%. Most US sectors ended the day in the positive. Energy was the best performer, rising 1.3%, and reversing most of yesterday's declines.
Today's geopolitical news:
Less than a month after four tankers were attacked in the Strait of Hormuz, another two carriers — one Japanese tanker carrying naphtha, and one Norwegian tanker transporting methanol, were set ablaze in the Gulf of Oman, after allegedly being hit by drones. US officials say Iran was "highly likely" to be behind the attacks, although no group has yet to claim responsibility.
After picking fights with Iran, Venezuela, China and Mexico, President Donald Trump has now turned his attention back to Germany, accusing the country of being too dependant on Russian natural gas. At issue is the Nord Stream 2 pipeline, which runs from Russia, under the Baltic Sea and into Germany. The US would like to see the Europeans import more US-produced LNG, which is generally more expensive than Russian gas, and is threatening sanctions. Nord Stream 2 is operated by Gazprom, with 50% of funding coming from Uniper, Wintershall, Royal Dutch Shell, and Engie. Once Nord Stream 2 is completed at the end of this year, capacity on the overall network will total 110 bcm/yr.
Today's supply/demand update:
The Canadian Association of Petroleum Producers (CAPP) cut its annual oil production growth forecast to just 1.4%, less than half what was forecasted five years ago. Canadian oil output is expected to reach 5.86 million bbl/day in 2035, up from the current average of about 4.3 million bbl/day. Capital investment is expected to fall to $37 billion this year, well below the 2014 high of $81 billion. Capital spending in the oil sands is expected to fall to $12 billion, a fifth consecutive year of declines, and just one-third of the investment dollars spent in 2014. CAPP blames the slump on "pipeline constraints, a lack of market diversity, and inefficient regulations."
In its Monthly Oil Market Report, OPEC reduced expectations for world oil demand in the first half of 2019, blamed squarely on US/China trade tensions. World oil demand is now expected to rise by 1.14 million bbl/day in 2019, down from a previous estimate of 1.21 million bbl/day.
After expanding at a "robust" 2.91 million bbl/day last year, the cartel's 2019 global supply growth forecast was left unchanged at 2.14 million bbl/day. Supply growth forecasts for the US, Brazil and Norway were nudged lower, offsetting bigger gains expected out of China and the UK.
Total OPEC output fell to a five-year low of 29.9 million bbl/day in May, down 236,000 bbl/day from the previous month. World oil supply inched up 40,000 bbl/day to 98.26 million bbl/day in May, with gains seen out of the US, Kazakhstan, Azerbaijan, Canada and the UK.
OECD commercial oil stockpiles were estimated to have risen by 25 million barrels last month, to about 2,874 million barrels, still slightly above than the 5-year average.
Today's other notable energy news:
Canadian billionaire Seymour Schulich says he bought about 5% of MEG Energy over the past few weeks, warning that Canada is squandering its energy resources. Schulich says he remains "optimistic" on the Canadian energy landscape, and blames the federal Liberals for destroying competitiveness in the sector.
Vermilion Energy says it drilled its first exploration well in Croatia, and expects to have results in the next four to five weeks. The company was awarded four licenses in 2015 for oil and gas exploration in the eastern part of the country.
Exxon Mobil and Saudi Basic Industries (SABIC) have agreed to proceed on construction of a new US$9 billion petrochemical plant, to be located just north of Corpus Christi, Texas. The 50/50 joint venture, called Gulf Coast Growth Ventures, will have the the world's largest ethane steam cracker, with a processing capacity of 1.8 million t/y. EPC contracts were handed out to Wood Group, McDermott, Turner Industries, Chiyoda, Kiewit, Mitsubishi and Zachry Group. The facility is expected to begin construction in the third quarter, and be operational by 2022.
Oilfield services provider Patterson-UTI is considering the divestment of its pressure pumping business, a segment worth an estimated US$1 billion. The company is reportedly looking to streamline its operations, as oil and gas companies scale back spending in lieu of returning funds to shareholders.
|Suncor Energy||SU||41.31||▲0.7||35.53||55.47||D W|
|Imperial Oil||IMO||35.95||▼-0.1||33.52||44.91||D W|
|Husky Energy||HSE||12.79||▲1.9||12.27||22.99||D W|
|TC Energy||TRP||65.52||▲0.4||47.90||66.93||D W|
|Pembina Pipeline||PPL||47.98||▼-0.1||39.15||50.65||D W|
|Inter Pipeline||IPL||20.00||▼-0.7||18.60||25.66||D W|
|Gibson Energy||GEI||22.18||▲0.5||16.90||23.75||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||35.58||▲0.5||30.11||49.08||D W|
|Cenovus Energy||CVE||11.21||▲2.2||8.74||14.84||D W|
|Vermilion Energy||VET||27.06||▲1.1||26.67||49.67||D W|
|Pason Systems||PSI||18.73||▲0.9||17.18||24.57||D W|
|Mullen Group||MTL||9.53||▲0.6||9.39||16.93||D W|
|Secure Energy||SES||6.85||▲1.5||6.25||9.44||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||41.61||▼-0.3||31.27||47.45||D W|
|Exxon Mobil||XOM||74.68||▲0.9||64.65||87.36||D W|
|Kinder Morgan||KMI||20.52||▲0.7||14.62||21.25||D W|
|Williams Co||WMB||27.38||▲0.6||20.36||32.22||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||86.49||▲1.7||80.41||133.53||D W|
|Occidental Petro||OXY||49.73||▲1.9||47.00||86.60||D W|
|Anadarko Petro||APC||70.07||▲0.4||40.40||76.70||D W|
|Pioneer Natural Res||PXD||143.25||▲1.4||119.08||195.00||D W|
|Baker Hughes||BHGE||22.78||▲2.2||20.09||35.55||D W|
|Ntl-Oilwell Varco||NOV||20.72||▲0.9||20.14||49.08||D W|
|Marathon Petro||MPC||47.90||▲2.0||45.47||88.45||D W|
|Phillips 66||PSX||85.24||▲2.4||78.44||123.97||D W|
|Valero Energy||VLO||77.26||▲1.0||68.81||122.42||D W|
Diamond Offshore Drilling (DO): Upgraded from Hold to Buy at Tudor Pickering.
Plains All American Pipeline (PAA): Upgraded from Peer Perform to Outperform at Wolfe Research.
Plains GP (PAGP): Upgraded from Peer Perform to Outperform at Wolfe Research.
UPDATED: DAILY (END-OF-DAY)
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