Renewed tensions in the Middle East give oil prices a boost, at least for now

Renewed tensions in the Middle East give oil prices a boost, at least for now

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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.

  • Gasoline rose 2% while Henry Hub slumped another 2.6%, blamed on below-normal temperatures throughout the US.

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.

  • The TSX was little changed for the day. The Canadian energy sector gained almost 1%, with all subsectors posting gains.

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.

OIL PRICES - DAILY % CHANGE
WTI DIFFERENTIALS
STREAM CLOSE %CHG L 52WK H
BRENT$61.31▲2.250.47
 
86.29
WTI$52.28▲2.242.53
 
76.41
CDN LT$45.32▲3.020.83
 
69.32
C5+$46.72▲2.937.04
 
71.40
WCS$39.23▲3.612.59
 
56.30

CRUDE OIL FUTURES CURVES
BRENT
WTI
█ JUN 13   █ JUN 6   █ MAY 30   █ MAY 23   (USD/BBL)
MARKET OVERVIEW
MARKETS
CURRENCIES & YIELDS
TSX SECTORS
TSX SECTORS - 52WK
SPX SECTORS
SPX SECTORS - 52WK
ENERGY SECTORS

TSX ENERGY SUB-SECTORS

SPX ENERGY SUB-SECTORS
TSX ENERGY STOCKS
TSX BULLISH INDICATORS
TOP 5
MEG Energy (MEG +12.3%)
Baytex Energy (BTE +5.8%)
Crescent Point (CPG +4.2%)
TORC O&G (TOG +3.9%)
Whitecap Res (WCP +3.4%)
12-MO
HIGHS
None
TSX BEARISH INDICATORS
BOTTOM
5
Shawcor (SCL -1.1%)
Nuvista Energy (NVA -0.8%)
Inter Pipeline (IPL -0.7%)
PrairieSky (PSK -0.7%)
Ensign Energy Svcs (ESI -0.6%)
12-MO
LOWS
Tourmaline (TOU +1.1%)
Gran Tierra (GTE +1.6%)
Kelt Exploration (KEL +0.8%)
Precision Drilling (PD +3.1%)
COMPANY TICKER CLOSE %CHG L 52WK H CHART
INTEGRATED
Suncor EnergySU41.31▲0.735.53
 
55.47D   W
Imperial OilIMO35.95▼-0.133.52
 
44.91D   W
Husky EnergyHSE12.79▲1.912.27
 
22.99D   W
MIDSTREAM
EnbridgeENB45.76▲0.439.40
 
51.22D   W
TC EnergyTRP65.52▲0.447.90
 
66.93D   W
Pembina PipelinePPL47.98▼-0.139.15
 
50.65D   W
Inter PipelineIPL20.00▼-0.718.60
 
25.66D   W
Keyera KEY32.63▲2.924.05
 
38.91D   W
Gibson EnergyGEI22.18▲0.516.90
 
23.75D   W
LARGE CAP E&P
Cdn Natural ResCNQ35.58▲0.530.11
 
49.08D   W
Cenovus EnergyCVE11.21▲2.28.74
 
14.84D   W
EncanaECA6.58▲3.36.35
 
18.54D   W
TourmalineTOU15.91▲1.115.69
 
25.79D   W
Vermilion EnergyVET27.06▲1.126.67
 
49.67D   W
SERVICES
Pason SystemsPSI18.73▲0.917.18
 
24.57D   W
EnerflexEFX16.16▲1.913.55
 
20.38D   W
Mullen Group MTL9.53▲0.69.39
 
16.93D   W
ShawcorSCL17.30▼-1.115.11
 
28.89D   W
Secure EnergySES6.85▲1.56.25
 
9.44D   W
REFINING & MARKETING
Parkland FuelPKI41.61▼-0.331.27
 
47.45D   W
S&P 500 ENERGY STOCKS
SPX BULLISH INDICATORS
TOP 5
Cimarex Energy (XEC +4.2%)
TechnipFMC (FTI +3.5%)
Schlumberger (SLB +3.4%)
Devon Energy (DVN +2.9%)
Hess Corp (HES +2.8%)
12-MO
HIGHS
None
SPX BEARISH INDICATORS
BOTTOM
5
None
12-MO
LOWS
None
COMPANY TICKER CLOSE %CHG L 52WK H CHART
INTEGRATED
Exxon MobilXOM74.68▲0.964.65
 
87.36D   W
ChevronCVX120.91▲0.6100.22
 
128.55D   W
MIDSTREAM
Kinder MorganKMI20.52▲0.714.62
 
21.25D   W
Williams CoWMB27.38▲0.620.36
 
32.22D   W
ONEOKOKE65.03▲0.950.26
 
71.99D   W
LARGE CAP E&P
ConocoPhillipsCOP59.06▲0.956.75
 
80.24D   W
EOG ResourcesEOG86.49▲1.780.41
 
133.53D   W
Occidental PetroOXY49.73▲1.947.00
 
86.60D   W
Anadarko PetroAPC70.07▲0.440.40
 
76.70D   W
Pioneer Natural ResPXD143.25▲1.4119.08
 
195.00D   W
SERVICES
SchlumbergerSLB36.79▲3.434.46
 
69.61D   W
HalliburtonHAL21.66▲2.820.98
 
48.29D   W
Baker HughesBHGE22.78▲2.220.09
 
35.55D   W
Ntl-Oilwell VarcoNOV20.72▲0.920.14
 
49.08D   W
TechnipFMCFTI22.89▲3.518.20
 
33.60D   W
REFINERS
Marathon PetroMPC47.90▲2.045.47
 
88.45D   W
Phillips 66PSX85.24▲2.478.44
 
123.97D   W
Valero EnergyVLO77.26▲1.068.81
 
122.42D   W
HollyFrontierHFC40.40▲2.137.73
 
76.58D   W
NYSE ADRs
COMPANY TICKER CLOSE %CHG L 52WK H CHART
Royal Dutch ShellRDS.A63.75▲0.455.04
 
71.85D   W
TotalTOT52.83▲0.049.70
 
65.69D   W
BPBP41.22▲0.436.28
 
47.25D   W
EniE31.33▲1.229.75
 
39.16D   W
EquinorEQNR19.50▲0.918.91
 
28.93D   W
ANALYST RATINGS

UPGRADES

  • 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.

DOWNGRADES

  • Enbridge (ENB.TO): Downgraded from Outperform to Peer Perform at Wolfe Research.

  • Marathon Oil (MRO): Downgraded from Overweight to Neutral at Atlantic Securities.

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
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Rising U.S. crude stockpiles push oil prices lower, wiping out six months of gains

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