Energy stocks lead markets higher on the first trading week of 2019
Canadian crude prices continue to recover from last year's dismal performance, with Western Canadian Select (WCS) rising another 20% and Canadian Light posting a gain of 18%. The differentials on Canada's light and heavy benchmarks narrowed again this week, ending Friday at US$3.92 and $12.33/bbl, respectively.
Brent and West Texas Intermediate (WTI) also posted nice gains for the week, rising about 9% and 6%, respectively.
The US Energy Information Administration (EIA) reported a huge build in gasoline and distillate stockpiles. Despite the bearish news, gasoline prices posted a 3.6% increase. Heating oil also had a good week, rising over 6.5% from last Friday's close.
This week's notable Canadian economic data:
- The Industrial Product Price Index (IPPI) declined 0.8% in November, mainly due to lower energy prices. Gasoline prices fell almost 11%, the sharpest drop since January 2015. Excluding energy, IPPI rose 0.2%.
- The Raw Materials Price Index (RMPI) also declined 11.7%, mostly due to a 25% drop in crude oil prices. Excluding energy products, RMPI fell 0.5% in November, bringing the annualized drop to 9.9%.
- Statistics Canada reported no change in the country's jobs data, leaving the unemployment rate unchanged at 5.6%. Alberta reported the loss of 36,200 full-time positions during the month, offsetting 19,300 part-time gains. The province's unemployment rate nudged up from 6.3% to 6.4%, well above the national average.
South of the border this week:
- Non-farm payrolls increased by 312,000 in December, the largest increase since February.
- Annual wage inflation is tracking 3.2%, while the unemployment rate rose to 3.9% due to an influx of new people looking for work.
- US Fed Chair Jerome Powell took a less aggressive stance on future interest rate hikes, calling inflationary pressures "muted." The news sent interest rates lower, further inverting the yield curve for short duration bonds.
- The US dollar dipped another 0.2% for the week, but remains stuck on the low end of its recent trading range.
In currency markets this week:
- Investors seeking safety once again fled to the Japanese yen. The yen rose another 1.7% this week, and is now up 5% from the lows of mid-December. The rate on 10-year Japanese bonds returned to negative territory for the first time since September 2017, falling to -0.03%.
- A major improvement in Canadian oil prices also sent the loonie soaring 2%, ending Friday at 74.77 cents.
After a rocky start, most global markets managed decent gains for the first trading week of the new year. The Nikkei was the only notable exception, falling 2.3% due to currency headwinds.
|Suncor Energy||SU||39.28||▲3.8||35.53||55.47||D W|
|Imperial Oil||IMO||35.03||▲0.3||33.43||44.91||D W|
|Husky Energy||HSE||14.80||▲5.7||13.33||22.99||D W|
|Pembina Pipeline||PPL||42.21||▲4.7||37.60||47.84||D W|
|Inter Pipeline||IPL||20.17||▲5.0||18.60||26.37||D W|
|Gibson Energy||GEI||19.70||▲8.1||15.68||23.32||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||34.64||▲5.6||30.11||49.08||D W|
|Cenovus Energy||CVE||10.30||▲9.8||8.74||14.84||D W|
|Vermilion Energy||VET||30.70||▲9.7||26.67||50.46||D W|
|Pason Systems||PSI||18.45||▲3.7||16.05||24.57||D W|
|Mullen Group||MTL||12.36||▲3.8||11.39||16.93||D W|
|Secure Energy||SES||7.05||▲5.4||6.25||9.82||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||34.67||▲1.4||26.70||47.45||D W|
|Exxon Mobil||XOM||71.15||▲4.4||64.65||89.30||D W|
|Kinder Morgan||KMI||16.24||▲6.2||14.62||19.83||D W|
|Williams Co||WMB||23.55||▲9.6||20.36||33.67||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||93.92||▲7.3||82.04||133.53||D W|
|Occidental Petro||OXY||63.21||▲4.5||56.83||87.67||D W|
|Anadarko Petro||APC||46.26||▲7.1||40.40||76.70||D W|
|Pioneer Natural Res||PXD||139.29||▲6.7||119.08||213.40||D W|
|Baker Hughes||BHGE||21.96||▲2.4||20.09||37.76||D W|
|Ntl-Oilwell Varco||NOV||26.73||▲3.7||24.27||49.08||D W|
|Marathon Petro||MPC||61.65||▲5.9||54.29||88.45||D W|
|Phillips 66||PSX||90.84||▲6.9||78.44||123.97||D W|
|Valero Energy||VLO||77.01||▲4.8||68.81||126.98||D W|
- Canadian international merchandise trade data (Nov 2018)
- API Weekly Statistical Bulletin
- Interest Rate Decision from the Bank of Canada
- EIA Weekly Petroleum Status Report
- EIA Weekly Natural Gas Storage Report
- Release of latest meeting minutes from US Federal Reserve
- Baker Hughes Weekly Rig Counts.