Oil prices post ninth week of losses as traders head for the exit

Oil prices post ninth week of losses as traders head for the exit

WHAT'S MOVING OIL PRICES THIS WEEK
GEOPOLITICS
NEUTRAL
  • No new news on the geopolitical front this week.
USD INDEX
BEARISH
  • The US dollar gained ground this week, rising 0.5%.
SUPPLY
NEUTRAL
  • After rebuffing plans to curb output, Russia now says they'll take a "wait-and-see" approach before making any decisions on production cuts. Russia and OPEC meet in Vienna on December 6 to review the outlook for 2019.
DEMAND
NEUTRAL
  • No new news on the demand front this week.
SENTIMENT
BEARISH
  • Oil prices have now posted seven consecutive weeks of losses.
  • Traders continue to liquidate positions, unwinding long positions.
  • Crude volatility, as measured by the VIX, has spiked back to the highs of 2016.
CURRENCIES & BONDS

This week's notable Canadian economic data from Statistics Canada:

  • The Consumer Price Index (CPI) rose at an annualized rate of 2.4%, up from 2.2% in September. Higher airfares and auto prices contributed to most of the gains. Gasoline prices are up 12% y/y.

  • Retail sales rose 0.2% to $50.9 billion in September, with gains led by food and beverages. Sales at gasoline stations declined 1.1%, the third decline in four months, reflecting lower gas prices.

  • About 446,500 Canadians received regular Employment Insurance (EI) benefits in September, down 14,300 from the previous month. Declines were seen in most provinces outside of Atlantic Canada.

US bond yields dipped again this week, as money continues to flow out of stocks and commodities, and into treasury markets and the US dollar. Yields also declined in Canada, Germany and the UK.

In currency markets, the Euro took a major hit this week, falling 1.5% after the EU threatened to punish the Italians for breaching protocols on deficit spending. The Aussie dollar and New Zealand kiwi also sank about 1.5%, due to ongoing concerns over the Chinese economy. The greenback posted a 0.5% gain, recouping some of the losses from last week. The loonie declined 0.7%.

SUPPLY & DEMAND UPDATES

US crude stockpiles rose for the ninth week in a row, adding another 4.9 million barrels last week. Total US crude inventories are now up over 50 million barrels from the lows of mid-September.

Refinery utilization in the Midwest bounced back this week, rising from about 74% in mid-October to over 90% last week. BP's 430,000 bbl/day Whiting Refinery in Chicago, the largest single buyer of Canadian crude, returned to normal service after being shutdown for almost two months. Stockpiles at the Cushing storage hub finally saw its first drawdown in 9 weeks.

According to Reuters, gasoline stockpiles in China are also rising, with exports falling to a 1-year low. The weakness in demand is being blamed on a glut of refining products in Asia and around the world.

 
us-inventory-report.jpg

WEEKLY US INVENTORY REPORT

NOV 21, 2018

Midwest refineries return to normal, providing some relief for Canadian producers

 

According to Baker Hughes, the US took 3 oil rigs out of service this week, while Canada added 6 new rigs.

OIL MARKETS
USD/BBL
% CHG W/W
52-WK
BRENT
WTI
C5+
CDN LT
WCS
58.80
50.42
37.17
25.17
17.92
58.80
50.42
37.17
20.83
12.59
86.29
76.41
71.40
69.32
56.21

Oil prices posted a seventh consecutive week of declines, blamed mostly on negative investor sentiment. Global oil prices are now down over 30% from the highs of early October, with Brent and WTI returning to the lows of fall 2017. Wholesale gasoline prices also touched a 2 year low on Friday, falling over 12% for the week.

The crude volatility index also spiked back to the highs of 2016, as traders race to exit their long positions, particularly for Brent.

This week's update on Canadian crude differentials:

  • The heavy oil discount narrowed by almost US$4 a barrel this week, falling to US$32.50 by Friday.

  • Economist at TD says they expects the heavy oil differential to return to a more normal range of US$20 to 25 a barrel over the next few quarters.

  • The discount on Canadian Light also shrunk by almost US$2/bbl this week.

  • The narrowing of discounts is being attributed to higher utilization rates in the Midwest and a pick-up in crude exports by rail. According to the National Energy Board, exports by rail jumped to a record 270,000 bbl/day in September.

Superstar oil trader Andy Hall says he expects OPEC to come to the rescue of falling oil prices, predicting a recovery around the new year.

On the other side of the trade is Credit Suisse, who says production cuts from Russia and Saudi Arabia are unlikely to move the needle on oversupply in the market, given rising production from just about everywhere else. 

CRUDE OIL FUTURES CURVES
BRENT
WTI
█ OIL PRICE (USD/BBL)   █ MONTH 3   █ MONTH 5 (VS NEAR MONTH)
MANAGED MONEY: FUTURES & OPTIONS
BRENT
WTI
█ OIL PRICE (USD/BBL)   █ LONG   █ SHORT █ NET LONG (1000 BBL CONTRACTS)
EQUITY MARKETS
    TSX SECTORS
52-WK
    SPX SECTORS
52-WK

The market meltdown continued this week, despite light trading volumes due to US Thanksgiving. The Dow Industrial was the worst performer, falling 4.4%, followed by the tech heavy Nasdaq, falling 4.3%. FAANG stocks once again led the declines, having wiped out about US$1 trillion in market cap from their most recent highs.

Except for the Nikkei, equity markets around the world sank in sympathy. In Toronto, TSX declined 1%.

ENERGY SECTOR PERFORMANCE
TSX ENERGY SUBSECTORS
SPX ENERGY SUBSECTORS

The TSX energy sector posted its 8 consecutive weekly decline, falling 4.8% and returning to the lows of early 2016. Declines were broadly based. Heavy-weights TransCanada and Enbridge bucked the downtrend, each gaining almost 2% for the week. Several Canadian producers and service stocks hit new multi-year lows on Friday.

On the S&P 500, the energy sector declined over 5%, with all energy components ending the week lower. Oilfield service stocks and independent refiners were the worst hit, with many names hitting new yearly lows.

TSX ENERGY STOCKS
TSX BULLISH INDICATORS
TOP 5
  • Tourmaline (TOU +2.9%)
  • TransCanada (TRP +1.9%)
  • Parkland Fuel (PKI +1.7%)
  • Enbridge (ENB +1.7%)
  • PrairieSky (PSK +0.9%)
  • 12-MO HIGHS
  • None
  • 10-YR HIGHS
  • None
  • GOLDEN CROSSES
  • None
  • TSX BEARISH INDICATORS
    BOTTOM
    5
  • Cenovus Energy (CVE -13.3%)
  • Crescent Point (CPG -12.8%)
  • Husky Energy (HSE -11.9%)
  • MEG Energy (MEG -11.6%)
  • Nuvista Energy (NVA -11.5%)
  • 12-MO LOWS
  • Keyera (KEY -2.3%)
  • Cdn Natural Res (CNQ -5.9%)
  • Encana (ECA -6.1%)
  • Seven Generations (VII -10%)
  • Shawcor (SCL -5.6%)
  • Mullen Group (MTL -4.5%)
  • Crescent Point (CPG -12.8%)
  • Kelt Exploration (KEL -4.3%)
  • Nuvista Energy (NVA -11.5%)
  • Parex Resources (PXT -7.5%)
  • Trican Well Svc (TCW -2.3%)
  • Whitecap Res (WCP -7.9%)
  • 10-YR LOWS
  • Seven Generations (VII -10%)
  • Crescent Point (CPG -12.8%)
  • DEATH CROSSES
  • None
  • COMPANY TICKER CLOSE %CHG L 52WK H RANK  CHARTS
    INTEGRATED
    Suncor EnergySU43.05▼-1.440.49
     
    55.4727D   W
    Imperial OilIMO39.58▼-5.733.43
     
    44.9147D   W
    Husky EnergyHSE15.35▼-11.915.09
     
    22.9913D   W
    MIDSTREAM
    EnbridgeENB43.40▲1.737.36
     
    51.0490D   W
    TransCanadaTRP53.56▲1.948.92
     
    64.4783D   W
    Pembina PipelinePPL43.75▼-1.937.60
     
    47.8480D   W
    Inter PipelineIPL21.92▼-3.720.68
     
    27.9253D   W
    Keyera KEY28.79▼-2.328.08
     
    38.9118D   W
    Gibson EnergyGEI21.11▼-3.715.68
     
    23.3297D   W
    LARGE CAP E&P
    Cdn Natural ResCNQ33.59▼-5.933.00
     
    49.0813D   W
    EncanaECA9.45▼-6.19.30
     
    18.543D   W
    Cenovus EnergyCVE9.25▼-13.39.03
     
    14.847D   W
    TourmalineTOU19.98▲2.917.78
     
    26.1929D   W
    Seven GenerationsVII11.07▼-10.010.89
     
    19.406D   W
    SERVICES
    ShawcorSCL20.31▼-5.620.00
     
    29.5014D   W
    Pason SystemsPSI21.15▼-2.816.05
     
    24.5791D   W
    Mullen Group MTL12.67▼-4.512.54
     
    16.9321D   W
    EnerflexEFX16.83▼-4.113.55
     
    18.7294D   W
    Secure EnergySES7.78▼-4.56.98
     
    9.8261D   W
    REFINING & MARKETING
    Parkland FuelPKI37.84▲1.725.02
     
    47.4593D   W
    S&P 500 ENERGY STOCKS
    SPX BULLISH INDICATORS
    TOP 5
  • EQT Corp (EQT +8.9%)
  • 12-MO HIGHS
  • None
  • 10-YR HIGHS
  • None
  • GOLDEN CROSSES
  • Cabot O&G (COG -0.6%)
  • SPX BEARISH INDICATORS
    BOTTOM
    5
  • HollyFrontier (HFC -10.4%)
  • Cimarex Energy (XEC -9.9%)
  • Devon Energy (DVN -9%)
  • Marathon Oil (MRO -9%)
  • Anadarko Petro (APC -8.4%)
  • 12-MO LOWS
  • Schlumberger (SLB -3.8%)
  • Halliburton (HAL -5.4%)
  • Ntl-Oilwell Varco (NOV -6%)
  • TechnipFMC (FTI -6.8%)
  • Baker Hughes (BHGE -3.9%)
  • Phillips 66 (PSX -7.9%)
  • Valero Energy (VLO -8.2%)
  • Marathon Petro (MPC -5.7%)
  • Devon Energy (DVN -9%)
  • Noble Energy (NBL -5.7%)
  • Newfield Expl (NFX -5.2%)
  • 10-YR LOWS
  • Baker Hughes (BHGE -3.9%)
  • DEATH CROSSES
  • EOG Resources (EOG -4.3%)
  • Marathon Petro (MPC -5.7%)
  • COMPANY TICKER CLOSE %CHG L 52WK H RANK  CHARTS
    INTEGRATED
    Exxon MobilXOM75.49▼-4.472.16
     
    89.3047D   W
    ChevronCVX113.60▼-4.6107.54
     
    133.8850D   W
    MIDSTREAM
    Kinder MorganKMI16.61▼-3.914.69
     
    19.8361D   W
    Williams CoWMB24.54▼-2.323.54
     
    33.6736D   W
    ONEOKOKE59.10▼-5.049.65
     
    71.9929D   W
    LARGE CAP E&P
    ConocoPhillipsCOP63.80▼-3.548.97
     
    80.2445D   W
    EOG ResourcesEOG100.70▼-4.396.54
     
    133.5320D   W
    Occidental PetroOXY69.83▼-4.862.47
     
    87.6732D   W
    Anadarko PetroAPC51.62▼-8.446.80
     
    76.707D   W
    Concho ResCXO126.96▼-8.3123.63
     
    163.1126D   W
    SERVICES
    SchlumbergerSLB46.37▼-3.845.80
     
    80.354D   W
    HalliburtonHAL30.70▼-5.430.47
     
    57.862D   W
    Ntl-Oilwell VarcoNOV31.62▼-6.031.30
     
    49.086D   W
    TechnipFMCFTI22.62▼-6.822.39
     
    35.005D   W
    Baker HughesBHGE22.46▼-3.921.67
     
    37.762D   W
    REFINERS
    Phillips 66PSX89.00▼-7.988.99
     
    123.978D   W
    Valero EnergyVLO77.03▼-8.277.00
     
    126.983D   W
    Marathon PetroMPC61.73▼-5.760.64
     
    88.4510D   W
    HollyFrontierHFC57.17▼-10.442.42
     
    83.2811D   W
    NYSE ADR ENERGY STOCKS
    ADRs BULLISH INDICATORS
    12-MO HIGHS
  • None
  • 10-YR HIGHS
  • None
  • GOLDEN CROSSES
  • None
  • ADRs BEARISH INDICATORS
    12-MO LOWS
  • Royal Dutch Shell (RDS.A -4.9%)
  • Eni (E -6.3%)
  • Sasol Limited (SSL -7%)
  • 10-YR LOWS
  • None
  • DEATH CROSSES
  • Total (TOT -5.5%)
  • COMPANY TICKER CLOSE %CHG L 52WK H RANK  CHARTS
    Royal Dutch ShellRDS.A58.98▼-4.958.55
     
    73.8611D   W
    TotalTOT53.98▼-5.553.37
     
    65.6931D   W
    BPBP39.89▼-2.336.15
     
    47.8342D   W
    EniE31.97▼-6.331.72
     
    40.1528D   W
    EquinorEQNR22.89▼-7.619.91
     
    28.9328D   W
    UPDATED: EVERY WEEKEND
    SOURCES:
  • COMMODITY PRICES REFLECT NEAR MONTH CONTRACT FROM THE NYMEX/CME GROUP
  • EQUITY PRICES & SECTOR PERFORMANCE PROVIDED BY NYSE & TMX GROUP
  • FUTURES & OPTIONS CONTRACTS FROM ICE/CFTC (WEEKLY DATA FOR PREVIOUS TUESDAY)
  • CHARTPACKS COURTESY STOCKCHARTS.COM (DIVIDEND ADJUSTED)
  • NOTES:
  • CRB = THOMSON REUTERS/CORECOMMODITY CRB INDEX
  • C5+ = EDMONTON CONDENSATE
  • US BONDS = TLT = iSHARES 20+ YEAR TREASURY BOND ETF
  • CA BONDS = XBB = iSHARES CANADIAN UNIVERSE BOND INDEX ETF
  • SECTOR & SUBSECTOR PERFORMANCES WEIGHTED BY MARKET CAP
  • 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
  • RANK:
  • BASED ON STOCKCHARTS TECHNICAL RANK (SCTR)
  • REFLECTS RELATIVE STRENGTH AMONG OTHER ENERGY STOCKS (PERCENTILE RANKING)
  • RISING RANK (↑) REFLECTS INCREASING RELATIVE STRENGTH
  • FALLING RANK (↓) REFLECTS DECREASING RELATIVE STRENGTH.
  • Canadian energy sector posts ninth week of losses

    Canadian energy sector posts ninth week of losses

    Oil prices post sixth week of declines despite plans for more OPEC cuts

    Oil prices post sixth week of declines despite plans for more OPEC cuts

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