Canada's light oil benchmarks move higher, as differentials narrow

Canada's light oil benchmarks move higher, as differentials narrow

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Today's energy market action:

  • A mixed bag in energy markets on Thursday, as traders await more information from the US Federal Reserve, and the dreaded yield curve continues to hover around zero.

  • Brent and WTI both slipped 0.6%. Western Canadian Select (WCS) and Edmonton Condensate (C5+) declined in tandem with WTI, as their discounts were unchanged for the day.

  • Canadian Light rose 2.2%, while Synthetic Crude (SCO) gained 1.2%, as both their respective differentials to WTI narrowed on Thursday. The discount on Canadian Light ended the day at almost US$4 a barrel, while SCO prices are US$0.30 above par with WTI.

  • Gasoline and heating oil gave back about 1%, while Henry Hub slid another 0.5%, despite a relatively benign US storage report released on Thursday morning.

Today's currency and equity market action:

  • US bond yields ticked higher, particularly on the long end, which flattened the yield curve to just 0.01% by the end of the day. All eyes on are on US Fed Chair Jerome Powell, who is due to deliver a speech at the annual Jackson Hole symposium tomorrow morning.

  • The British pound was today's big winner in currency markets, gaining over 1% after France and Germany both expressed optimism for a new Brexit deal before the Halloween deadline. The US dollar and loonie were little changed for the day.

  • Markets in New York dipped lower at the start of the trading day, but mostly recovered by the closing bell. The NYSE was unchanged, while the NASDAQ fell 0.4%. The S&P 500 Large Cap Index declined 0.1%, dragged lower by a 0.5% decline in energy stocks.

  • In Toronto, the TSX also slid lower at the start of trade, but failed to rally in the afternoon, ending Thursday down 0.3%. All sectors were either unchanged or lower for the day, including energy, which fell 0.7%.

Today's notable energy news:

  • Bonterra Energy says it has recovered most of the oil spilled near Washout Creek last week, declaring an end to the emergency phase. The company says shoreline clean-up and further monitoring will continue over the next two to three weeks.

  • According to Goldman Sachs, Alberta's plan to extend its curtailment program into 2020 will narrow the WCS-WTI differential next year, and improve profitability among the province's oil producers, despite lower output. The investment firm says Cenovus, Canadian Natural Resources and MEG Energy will be "the largest beneficiaries," while integrated oil majors Suncor, Imperial Oil and Husky Energy will "be less sensitive" to any changes in the crude differential.

  • Despite all the fanfare behind crude-by-rail, Canada's energy patch exported just 286,700 bbl/day by rail to the US in June, roughly unchanged from the previous month. The Gulf Coast premium on Canadian heavy crude is only US$10 a barrel, making the economics of crude-by-rail marginal at best.

  • According to the American Petroleum Institute, total US petroleum demand averaged 20.8 million bbl/day in July, up almost 1% from the same time last year, and the highest since July 2005. Jet fuel consumption hit a record high of 1.8 million bbl/day during the month.

  • TechnipFMC announced a significant EPCI contract by Royal Dutch Shell for its PowerNap project in the US Gulf of Mexico. PowerNap is expected to be completed by the end of 2021, producing up to 35,000 bbl/day at peak rates. The contract was said to be worth as much as US$250 million.

  • Honeywell UOP announced a contract with PetroChina Guangdong Petrochemical Co to provide a variety of engineering and technology services for its integrated petrochemical complex in China. The new facility will have a crude processing capacity of 20 million t/y. Financial terms of the deal were not disclosed.

OIL PRICES - DAILY % CHANGE
WTI DIFFERENTIALS
STREAM CLOSE %CHG L 52WK H
BRENT$59.92▼0.650.47
 
86.29
WTI$55.35▼0.642.53
 
76.41
SCO$55.65▲1.225.15
 
67.59
C5+$49.35▼0.737.04
 
68.87
CDN LT$51.45▲2.220.83
 
61.30
WCS$42.50▼0.812.59
 
56.30

CRUDE OIL FUTURES CURVES
BRENT
WTI
█ AUG 22   █ AUG 15   █ AUG 8   █ AUG 1   (USD/BBL)
MARKET OVERVIEW
MARKETS
CURRENCIES & YIELDS
     TSX SECTORS
52WK Δ
     SPX SECTORS
52WK Δ
ENERGY SECTORS

TSX ENERGY SUB-SECTORS

SPX ENERGY SUB-SECTORS
TSX ENERGY STOCKS
TSX BULLISH INDICATORS
TOP 5
MEG Energy (MEG +0.8%)
Whitecap Res (WCP +0.5%)
Cenovus Energy (CVE +0.4%)
Husky Energy (HSE +0.2%)
Ensign Energy Svcs (ESI 0%)
12-MO
HIGHS
None
TSX BEARISH INDICATORS
BOTTOM
5
Peyto Exploration (PEY -7.4%)
Kelt Exploration (KEL -4.9%)
Enerflex (EFX -4.5%)
Seven Generations (VII -3.8%)
TORC O&G (TOG -2.9%)
12-MO
LOWS
Pason Systems (PSI -2%)
Enerflex (EFX -4.5%)
Secure Energy (SES -2.5%)
COMPANY TICKER CLOSE %CHG L 52WK H CHART
INTEGRATED
Suncor EnergySU37.76▼-0.235.53
 
54.51D   W
Imperial OilIMO32.46▼-0.832.09
 
44.69D   W
Husky EnergyHSE9.27▲0.28.48
 
22.99D   W
MIDSTREAM
EnbridgeENB44.44▼-1.439.40
 
51.22D   W
TC EnergyTRP64.79▼-0.347.90
 
67.15D   W
Pembina PipelinePPL48.59▼-0.639.15
 
50.65D   W
Inter PipelineIPL24.46▼-1.018.60
 
25.24D   W
Keyera KEY32.63▼-1.124.05
 
38.17D   W
Gibson EnergyGEI23.27▼-1.316.90
 
24.43D   W
LARGE CAP E&P
Cdn Natural ResCNQ31.32▼-0.230.11
 
46.39D   W
Cenovus EnergyCVE11.41▲0.48.74
 
14.26D   W
EncanaECA5.67▼-1.75.25
 
17.60D   W
TourmalineTOU13.03▼-2.112.40
 
23.86D   W
Vermilion EnergyVET19.72▼-1.519.14
 
43.91D   W
SERVICES
Pason SystemsPSI16.19▼-2.016.15
 
24.57D   W
EnerflexEFX12.47▼-4.512.42
 
20.38D   W
Mullen Group MTL9.12▼-1.48.65
 
16.93D   W
ShawcorSCL16.73▼-1.515.11
 
28.89D   W
Secure EnergySES5.85▼-2.55.81
 
9.44D   W
REFINING & MARKETING
Parkland FuelPKI42.50▼-1.031.59
 
47.45D   W
S&P 500 ENERGY STOCKS
SPX BULLISH INDICATORS
TOP 5
Ntl-Oilwell Varco (NOV +1.2%)
Baker Hughes (BHGE +0.9%)
HollyFrontier (HFC +0.6%)
Noble Energy (NBL +0.4%)
Concho Res (CXO +0.4%)
12-MO
HIGHS
None
SPX BEARISH INDICATORS
BOTTOM
5
EOG Resources (EOG -2.2%)
Devon Energy (DVN -1.5%)
Hess Corp (HES -1.4%)
ONEOK (OKE -1.3%)
Valero Energy (VLO -1.3%)
12-MO
LOWS
None
COMPANY TICKER CLOSE %CHG L 52WK H CHART
INTEGRATED
Exxon MobilXOM69.57▼-0.264.65
 
87.36D   W
ChevronCVX117.73▼-0.1100.22
 
127.60D   W
MIDSTREAM
Kinder MorganKMI20.20▼-0.914.62
 
21.50D   W
Williams CoWMB23.60▼-1.220.36
 
30.63D   W
ONEOKOKE70.28▼-1.350.26
 
72.38D   W
LARGE CAP E&P
ConocoPhillipsCOP52.26▼-0.750.59
 
80.24D   W
EOG ResourcesEOG75.51▼-2.273.95
 
133.53D   W
Occidental PetroOXY44.70▼-0.843.08
 
83.35D   W
Pioneer Natural ResPXD126.07▼-0.7114.79
 
189.78D   W
Hess CorpHES63.95▼-1.435.59
 
74.81D   W
SERVICES
SchlumbergerSLB33.71▲0.131.11
 
65.61D   W
HalliburtonHAL18.67▲0.417.46
 
42.57D   W
Baker HughesBHGE21.43▲0.920.09
 
34.49D   W
Ntl-Oilwell VarcoNOV19.32▲1.218.05
 
47.46D   W
TechnipFMCFTI24.02▲0.218.20
 
32.91D   W
REFINERS
Marathon PetroMPC46.89▼-0.743.96
 
88.45D   W
Phillips 66PSX98.46▼-0.978.44
 
121.55D   W
Valero EnergyVLO77.42▼-1.368.81
 
122.42D   W
HollyFrontierHFC45.62▲0.637.73
 
76.56D   W
NYSE ADRs
COMPANY TICKER CLOSE %CHG L 52WK H CHART
Royal Dutch ShellRDS.A55.89▼-0.654.78
 
70.09D   W
TotalTOT48.97▼-0.347.70
 
65.69D   W
BPBP36.52▼-0.635.73
 
47.16D   W
EniE29.41▼-0.428.56
 
39.16D   W
EquinorEQNR17.10▼-0.216.24
 
28.93D   W
ANALYST RATINGS

UPGRADES

  • Kinder Morgan (KMI): Upgraded from Underperform to Peer Perform at Wolfe Research.

  • Noble Energy (NBL): Upgraded from Market Perform to Outperform at Oppenheimer.

DOWNGRADES

  • Delek US (DK): Downgraded from Outperform to Market Perform at Cowen.

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
• PRICE CHARTS PROVIDED BY STOCKCHARTS.COM ARE DIVIDEND ADJUSTED

NOTES:
• OIL PRICES, FUTURES AND DIFFERENTIALS SHOWN IN USD/BBL
• WCS = WESTERN CANADIAN SELECT; C5+ = EDMONTON CONDENSATE; SCO = SYNTHETIC CRUDE
• FUTURES CURVES REFLECT 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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