Enbridge meltdown sinks TSX and Canadian energy sector
Today's energy market action:
After initially moving higher earlier in the day, energy markets all fizzled by the afternoon, sending the US and global crude benchmarks lower for a fourth consecutive day.
Brent declined 5% for the day, due mostly to last Friday's expiry of the July contract last Friday. Brent futures are in steep backwardation, which sees future months trade at lower prices. WTI fell a more modest 0.5%.
WCS rose 4.4%, as the heavy oil discount narrowed by almost US$2 to US$13.20/bbl. The narrowing is being blamed on CNRL's evacuation of two facilities in the Slave Lake region due to encroaching wildfires, taking 65,000 bbl/day of crude production offline.
Canadian Light rose 0.6%, while Edmonton condensate was unchanged for the day.
Heating oil, gasoline and Henry Hub natural gas prices also ended the day about 2% lower.
According to Reuters, OPEC members produced 30.17 million bbl/day of crude in May, down 60,000 bbl/day from April, and the lowest since 2015. Russia's output averaged 11.11 million bbl/day last month, down 120,000 bbl/day from the previous month, and the lowest since June 2018.
Today's currency, treasury and equity market update:
US bond yields tumbled again on Monday, particularly on the short end of the curve. The US dollar lost 0.5% for the day, giving a boost to most other foreign currencies.
Except for mega-cap FANG stocks, US equity markets recovered slightly on the first trading day of the week. The NYSE rose 0.6% while the S&P 500 lost 0.3%. The Dow Jones Industrial Average was little changed, while the NASDAQ sank 1.6%. The SPX energy sector rose 1.4%, its first gain in the past five trading days.
The TSX dipped 0.1% for the day. Canada's energy sector lost 1.4% on Tuesday, blamed mostly on a sharp decline in Enbridge shares.
Today's notable energy news:
A Minnesota court has overturned the state's approval of Enbridge's Line 3 Replacement Project (L3RP), calling its environmental impact assessment inadequate. Enbridge says it is disappointed with the ruling, and will work with state regulators to determine the next steps.
BP has agreed to sell its mature oil assets in Egypt to Dragon Oil, wholly-owned subsidiary of the Emirates National Oil Company. The divestiture includes BP’s interest in the Gulf of Suez Petroleum Company. Financial terms of the deal were not disclosed, although sources at Reuters estimate the selling price to be over US$600 million.
Total has agreed to buy Toshiba's US LNG business, which includes a 20-year tolling agreement for 2.2 million t/y of LNG from Freeport LNG in Texas, which is expected to start commercial operations by next summer. Under terms of the deal, Total will pay US$15 million for Toshiba America LNG but receive US$815 million in cash for all contract assignments related to the business.
Kinder Morgan received a positive environmental assessment from FERC on its proposed Lockridge Extension Pipeline, which would add natural gas transportation capacity from Waha, Texas into the Trans-Pecos Pipeline, which connects into Mexico. The company was also forced to evacuate its Carson storage terminal in California after an explosion which injured four people.
Murphy Oil closed on its previously announced US$1.23 billion acquisition of various deepwater assets in the Gulf of Mexico, which is expected to add up to 35,000 boe/day of output to the company's total production.
|Suncor Energy||SU||40.69||▼-1.3||35.53||55.47||D W|
|Imperial Oil||IMO||35.96||▼-0.5||33.52||44.91||D W|
|Husky Energy||HSE||12.64||▼-0.4||12.31||22.99||D W|
|TC Energy||TRP||65.35||▼-0.8||47.90||66.93||D W|
|Pembina Pipeline||PPL||48.18||▼-0.1||39.15||50.65||D W|
|Inter Pipeline||IPL||20.70||▲0.5||18.60||25.66||D W|
|Gibson Energy||GEI||22.10||▲0.2||16.90||23.75||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||35.77||▼-2.0||30.11||49.08||D W|
|Cenovus Energy||CVE||10.85||▼-2.1||8.74||14.84||D W|
|Vermilion Energy||VET||28.44||▲0.4||26.67||49.67||D W|
|Pason Systems||PSI||19.29||▼-0.2||17.18||24.57||D W|
|Mullen Group||MTL||9.90||▲1.5||9.39||16.93||D W|
|Secure Energy||SES||6.94||▼-0.7||6.25||9.44||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||41.75||▲0.6||31.16||47.45||D W|
|Exxon Mobil||XOM||71.88||▲1.6||64.65||87.36||D W|
|Kinder Morgan||KMI||20.14||▲1.0||14.62||20.57||D W|
|Williams Co||WMB||26.87||▲1.9||20.36||32.22||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||82.95||▲1.3||81.32||133.53||D W|
|Occidental Petro||OXY||49.32||▼-0.9||49.05||87.67||D W|
|Anadarko Petro||APC||70.03||▼-0.5||40.40||76.70||D W|
|Pioneer Natural Res||PXD||142.61||▲0.5||119.08||197.42||D W|
|Baker Hughes||BHGE||21.84||▲2.0||20.09||35.68||D W|
|Ntl-Oilwell Varco||NOV||21.22||▲1.8||20.38||49.08||D W|
|Marathon Petro||MPC||47.13||▲2.5||45.47||88.45||D W|
|Phillips 66||PSX||82.20||▲1.7||78.44||123.97||D W|
|Valero Energy||VLO||72.00||▲2.3||68.81||126.98||D W|
Targa Resources (TRGP): Upgraded from Hold to Buy at SunTrust Banks.
PetroChina (PTR): Downgraded from Neutral to Underperform at Credit Suisse.
UPDATED: DAILY (END-OF-DAY)
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