Canadian energy sector posts ninth week of losses

Canadian energy sector posts ninth week of losses

WHAT'S MOVING OIL PRICES THIS WEEK
GEOPOLITICS
NEUTRAL
  • No new news on the geopolitical front this week.
USD INDEX
NEUTRAL
  • The US dollar gained 0.4% for the week, but remains below its recent November highs.
SUPPLY
NEUTRAL
DEMAND
NEUTRAL
  • No new news on the demand front this week.
SENTIMENT
BEARISH
  • Brent has failed to hold above US$60, ending Friday below US$59/bbl. WTI prices have been less volatile, gaining 1.0% w/w and ending Friday at almost US$51/bbl.
  • Longs positions on both Brent and WTI eased slightly last week. Brent traders continue to add new short positions, while the number of new shorts on WTI declined last week. About US$12 billion has been pulled out oil markets for the month of November.
CURRENCIES & BONDS

This week's notable Canadian economic data:

  • The Industrial Product Price Index (IPPI), rose 0.2% in October, mainly due to higher food prices. Gasoline declined almost 4% for the month, offsetting gains in diesel and other refinery products. On an annualized basis, IPPI decelerated to 5.3% in October.

  • The Raw Materials Price Index (RMPI), fell 2.4% in October, mainly as a result of a 7% decline in crude prices. On an annualized basis, RMPI decelerated to 7.7% in October.

  • For the month of September, the Canadian economy contracted 0.1% m/m, due to a slowdown in the energy patch. This is the third decline for the energy sector in the past four months.

  • GDP expanded 0.5% in the third quarter, down from 0.7% in Q2. Exports edged up 0.2%, despite a drop in investments. The best performing sectors in Q3 were mining, petroleum refining and real-estate. On an annualized basis, the country's GDP is up 2.0% y/y.

The latest US GDP figures peg growth south of the border at 3.5% annually in the third quarter, unchanged from previous estimates, but down substantially from a growth rate of 4.2% in Q2.

Global bond yields declined this week after Fed Chair Jerome Powell softened his stance on rate hikes going forward. The 10-year slid 0.04 basis points to 3.01% on Friday. Yields on Canadian bonds also declined, as economists now forecast no change to interest rates at the next Bank of Canada decision meeting on Wednesday.

The US dollar ticked higher by 0.4% but failed to top recent highs. The Aussie dollar and New Zealand kiwi were the big winners in currency markets this week, both rising over 1%. The Euro, pound sterling and Canadian dollar dipped about 0.5%.

SUPPLY & DEMAND UPDATES

All eyes are on OPEC and friends in Vienna next Wednesday, as the group discusses output plans for 2019. The latest rumours indicate the group will be looking for a 1.3 million bbl/day reduction, with Nigeria and Libya now asked to participate in the cuts.

 
us-inventory-report.jpg

WEEKLY US INVENTORY REPORT

NOV 28, 2018

Crude stockpiles build for the tenth week in a row, despite record refinery runs

 

According to Baker Hughes, the US put two more oil rigs into service this week, rising to 887. Canada lost 5 oil rigs, falling to 119. US production held steady at 11.7 million bbl/day last week.

OIL MARKETS
USD/BBL
% CHG W/W
52-WK
BRENT
WTI
C5+
CDN LT
WCS
58.71
50.93
38.63
27.93
22.43
58.71
50.29
37.04
20.83
12.59
86.29
76.41
71.40
69.32
56.21

Russian President Vladimir Putin called US$60 oil "balanced and fair," but now says he remains open to reducing output next year.

Brent and WTI ended November down 22%, and over 30% from the highs of early October. In contrast, Western Canadian Select ended the month about 0.5% higher than the end of October, as the discount to WTI narrowed to just US$28.50/bbl on Friday.

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

Global equity markets rebounded this week, as trade tensions between China and the US appear to be easing. The S&P 500 rose about 5%, with gains seen across all sectors. The TSX rose just 1.3%, held back by losses in energy, materials and utility stocks.

ENERGY SECTOR PERFORMANCE
TSX ENERGY SUBSECTORS
SPX ENERGY SUBSECTORS

The TSX energy sector declined for the ninth week in a row, ending Friday down another 1.3%. The sector is now down over 20% in the past two months. Producers and oilfield services firms remain the weakest of all energy subsectors, with many names hitting new multi-year lows during the week.

Credit ratings agency DBRS warns that several large Canadian oil and gas companies face a credit downgrade if pricing differentials don't improve. The agency calls the current discount on Canadian light, heavy and synthetic crude "very unusual," obviously putting a lot of downward pressure on cash flow and credit metrics.

The S&P 500 energy sector gained 3.5% for the week, with most names ending Friday in the positive. The oilfield services subsector remains by far the weakest subsector among the group. The sector is also down 15% from the highs of early October.

TSX ENERGY STOCKS
TSX BULLISH INDICATORS
TOP 5
  • Husky Energy (HSE +7.5%)
  • Cenovus Energy (CVE +6.2%)
  • CES Energy (CEU +5.6%)
  • Gran Tierra (GTE +4.1%)
  • MEG Energy (MEG +3.6%)
  • 12-MO HIGHS
  • None
  • 10-YR HIGHS
  • None
  • GOLDEN CROSSES
  • None
  • TSX BEARISH INDICATORS
    BOTTOM
    5
  • Advantage O&G (AAV -17.1%)
  • ARC Resources (ARX -11.3%)
  • Birchcliff Energy (BIR -10.2%)
  • Crescent Point (CPG -9.6%)
  • Altagas (ALA -8.8%)
  • 12-MO LOWS
  • Keyera (KEY +1.1%)
  • Cdn Natural Res (CNQ -0.6%)
  • Encana (ECA -5.3%)
  • Tourmaline (TOU -7.9%)
  • Seven Generations (VII -8.5%)
  • Shawcor (SCL -3.8%)
  • Mullen Group (MTL -2.9%)
  • Advantage O&G (AAV -17.1%)
  • Altagas (ALA -8.8%)
  • ARC Resources (ARX -11.3%)
  • Crescent Point (CPG -9.6%)
  • Ensign Energy Svcs (ESI -3.8%)
  • Freehold Royalties (FRU -4.3%)
  • Kelt Exploration (KEL -5.4%)
  • Nuvista Energy (NVA -4.9%)
  • Precision Drilling (PD -5.9%)
  • Paramount Res (POU -7.2%)
  • PrairieSky (PSK -1.3%)
  • Parex Resources (PXT +1.4%)
  • Trican Well Svc (TCW -2.4%)
  • Whitecap Res (WCP -8.6%)
  • 10-YR LOWS
  • Tourmaline (TOU -7.9%)
  • Seven Generations (VII -8.5%)
  • Advantage O&G (AAV -17.1%)
  • Altagas (ALA -8.8%)
  • ARC Resources (ARX -11.3%)
  • Crescent Point (CPG -9.6%)
  • Ensign Energy Svcs (ESI -3.8%)
  • DEATH CROSSES
  • Husky Energy (HSE +7.5%)
  • Enbridge (ENB +0.6%)
  • COMPANY TICKER CLOSE %CHG L 52WK H RANK  CHARTS
    INTEGRATED
    Suncor EnergySU42.84▼-0.540.49
     
    55.4724D   W
    Imperial OilIMO39.57▼0.033.43
     
    44.9140D   W
    Husky EnergyHSE16.50▲7.515.29
     
    22.9924D   W
    MIDSTREAM
    EnbridgeENB43.66▲0.637.36
     
    51.0490D   W
    TransCanadaTRP54.45▲1.748.92
     
    63.2982D   W
    Pembina PipelinePPL44.80▲2.437.60
     
    47.8482D   W
    Inter PipelineIPL21.36▼-2.620.68
     
    27.9234D   W
    Keyera KEY29.10▲1.127.85
     
    38.9120D   W
    Gibson EnergyGEI21.35▲1.115.68
     
    23.3297D   W
    LARGE CAP E&P
    Cdn Natural ResCNQ33.39▼-0.632.08
     
    49.0814D   W
    EncanaECA8.95▼-5.38.86
     
    18.543D   W
    Cenovus EnergyCVE9.82▲6.29.03
     
    14.8416D   W
    TourmalineTOU18.40▼-7.917.73
     
    26.1917D   W
    Seven GenerationsVII10.13▼-8.59.69
     
    19.404D   W
    SERVICES
    ShawcorSCL19.53▼-3.818.72
     
    29.5011D   W
    Pason SystemsPSI19.93▼-5.816.05
     
    24.5758D   W
    Mullen Group MTL12.30▼-2.912.04
     
    16.9319D   W
    EnerflexEFX16.31▼-3.113.55
     
    18.7287D   W
    Secure EnergySES7.20▼-7.56.98
     
    9.8225↓D   W
    REFINING & MARKETING
    Parkland FuelPKI39.14▲3.425.11
     
    47.4594D   W
    S&P 500 ENERGY STOCKS
    SPX BULLISH INDICATORS
    TOP 5
  • HollyFrontier (HFC +9.3%)
  • Marathon Oil (MRO +6.6%)
  • Marathon Petro (MPC +5.6%)
  • Exxon Mobil (XOM +5.3%)
  • Phillips 66 (PSX +5.1%)
  • 12-MO HIGHS
  • None
  • 10-YR HIGHS
  • None
  • GOLDEN CROSSES
  • None
  • SPX BEARISH INDICATORS
    BOTTOM
    5
  • Newfield Expl (NFX -5.9%)
  • Schlumberger (SLB -2.7%)
  • Cabot O&G (COG -1.7%)
  • Noble Energy (NBL 0%)
  • 12-MO LOWS
  • Schlumberger (SLB -2.7%)
  • Valero Energy (VLO +3.7%)
  • Devon Energy (DVN +0.4%)
  • Newfield Expl (NFX -5.9%)
  • 10-YR LOWS
  • None
  • DEATH CROSSES
  • Concho Res (CXO +2.7%)
  • Apache (APA +0.8%)
  • COMPANY TICKER CLOSE %CHG L 52WK H RANK  CHARTS
    INTEGRATED
    Exxon MobilXOM79.50▲5.372.16
     
    89.3053D   W
    ChevronCVX118.94▲4.7107.54
     
    133.8859D   W
    MIDSTREAM
    Kinder MorganKMI17.07▲2.814.69
     
    19.8354D   W
    Williams CoWMB25.32▲3.223.54
     
    33.6738D   W
    ONEOKOKE61.43▲3.950.63
     
    71.9933D   W
    LARGE CAP E&P
    ConocoPhillipsCOP66.18▲3.750.08
     
    80.2444D   W
    EOG ResourcesEOG103.31▲2.696.54
     
    133.5322D   W
    Occidental PetroOXY70.27▲0.662.47
     
    87.6723D   W
    Anadarko PetroAPC52.90▲2.546.80
     
    76.709D   W
    Concho ResCXO130.34▲2.7123.63
     
    163.1136D   W
    SERVICES
    SchlumbergerSLB45.10▼-2.744.68
     
    80.352D   W
    HalliburtonHAL31.43▲2.430.47
     
    57.863D   W
    Ntl-Oilwell VarcoNOV32.11▲1.531.30
     
    49.085D   W
    TechnipFMCFTI23.09▲2.122.39
     
    35.005D   W
    Baker HughesBHGE22.82▲1.621.67
     
    37.763D   W
    REFINERS
    Phillips 66PSX93.52▲5.188.99
     
    123.9712D   W
    Valero EnergyVLO79.90▲3.776.25
     
    126.983D   W
    Marathon PetroMPC65.16▲5.660.64
     
    88.4514D   W
    HollyFrontierHFC62.47▲9.342.42
     
    83.2824D   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
  • None
  • 10-YR LOWS
  • None
  • DEATH CROSSES
  • BP (BP +1.2%)
  • COMPANY TICKER CLOSE %CHG L 52WK H RANK  CHARTS
    Royal Dutch ShellRDS.A60.40▲2.458.55
     
    73.8612D   W
    TotalTOT55.61▲3.053.37
     
    65.6931D   W
    BPBP40.35▲1.236.15
     
    47.8330↓D   W
    EniE32.25▲0.931.72
     
    40.1521D   W
    EquinorEQNR23.38▲2.119.91
     
    28.9324D   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.
  • Energy stocks fail to respond to higher oil prices, as global headwinds persist

    Energy stocks fail to respond to higher oil prices, as global headwinds persist

    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

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