Oil prices old steady despite fears of a global slowdown
WTI briefly touched US$60 on Thursday, while WCS peaked above US$50 for the first time since last July. The WCS discount narrowed by about US$1 to end the week at US$9.50 a barrel.
Brent was more subdued this week, giving back all the week's gains on Friday. The differential between Brent and WTI has narrowed from US$10 just a few weeks ago to less than US$8 a barrel on Friday.
This week's notable Canadian economic news:
- The Consumer Price Index ticked up to 1.5% in February, as measured on an annualized basis. Housing costs contributed to most of the gains, while energy prices posted a 6% decline, mostly due to a 12% drop in gasoline prices. Ex-gasoline, Canada's inflation rate is tracking at 2.1%.
- Wholesale sales rose 0.6% to $63.5 billion in January, with gains seen in five out of seven subsectors.
- Retail sales fell another 0.3% in January, the third consecutive month of declines. Weakness in auto sales were mostly to blame. Receipts at gasoline stations dropped 0.4%, despite a 1.9% increase in sales volumes.
- The number of Canadians receiving regular Employment Insurance benefits declined over 2% in January, falling to 435,600. Most provinces saw a drop, except Alberta, Saskatchewan and BC.
- The federal government is projecting a $20 billion deficit for this fiscal year (2019–2020), falling to $10 billion by 2023–2024.
- Canadian bond yields followed the US lower this week. The loonie sank almost 1%, ending Friday just below 74.50 cents.
This week's US economic news:
- The US Federal Reserve reiterated its promise to be "patient" with future rate hikes and lowered its monthly bond sales cap from US$30 billion to US$15 billion. Fed Chairman Jerome Powell said "it may be some time" before jobs and inflation data requires an increase in interest rates. Economists are no longer expecting any rate hikes this year, and just one increase in 2020.
- The yield curve inverted further this week, warning of a potential economic slowdown ahead. Yields on the 10-year dropped below the 3-month for the first time since 2007.
Across the pond this week:
- Weak manufacturing data out of Germany sent the Euro tumbling on Friday, while German bund yields ended the week below zero for the first time since the fall of 2016.
- Deal or no-deal continues in the UK, as the country tries to avert a hard-Brexit at the end of this month. The pound dipped 0.6% for the week.
- Investors seeking safe-haven fled to the Japanese yen, which rose 1.4%. Yields on the Japanese 10-year sank to -0.07%.
Fears of a global slowdown spooked equity markets on Friday, wiping out all gains for the week.
In the US, small cap stocks were the worst hit, falling over 3%. The broader S&P 500 Large Cap Index fell about 1%, with financials taking the biggest haircut.
In Canada, the TSX faired slightly better, declining just 0.3% for the week.
Despite a sharp pullback on Friday, the TSX energy sector managed a 0.7% gain for the week. The SPX energy basket was roughly unchanged.
Lower bond yields helped boost midstream stocks on both sides of the border. TransCanada, Kinder Morgan, Pembina Pipeline and Gibson Energy hit new 1-year highs during the week. Independent refiners were the worst performers in US energy markets.
|Suncor Energy||SU||45.19||▲0.4||35.53||55.47||D W|
|Imperial Oil||IMO||36.43||▲0.1||33.43||44.91||D W|
|Husky Energy||HSE||13.59||▲0.9||13.33||22.99||D W|
|Pembina Pipeline||PPL||49.61||▲0.5||37.60||50.45||D W|
|Inter Pipeline||IPL||21.78||▼-0.6||18.60||25.66||D W|
|Gibson Energy||GEI||22.87||▲0.7||15.90||23.63||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||37.02||▲0.1||30.11||49.08||D W|
|Cenovus Energy||CVE||11.77||▲0.7||8.74||14.84||D W|
|Vermilion Energy||VET||33.60||▲1.1||26.67||49.67||D W|
|Pason Systems||PSI||20.07||▼-0.4||16.61||24.57||D W|
|Mullen Group||MTL||12.20||▼-1.0||11.26||16.93||D W|
|Secure Energy||SES||8.32||▲0.6||6.25||9.44||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||39.58||▲0.1||27.96||47.45||D W|
|Exxon Mobil||XOM||80.48||▲0.4||64.65||87.36||D W|
|Kinder Morgan||KMI||19.90||▲0.2||14.62||20.44||D W|
|Williams Co||WMB||28.47||▲3.3||20.36||32.22||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||93.68||▲5.4||82.04||133.53||D W|
|Occidental Petro||OXY||65.24||▼-0.4||56.83||87.67||D W|
|Anadarko Petro||APC||43.23||▼-3.0||40.40||76.70||D W|
|Pioneer Natural Res||PXD||140.56||▲3.6||119.08||213.40||D W|
|Baker Hughes||BHGE||27.16||▼-2.5||20.09||37.76||D W|
|Ntl-Oilwell Varco||NOV||26.63||▲0.6||24.27||49.08||D W|
|Marathon Petro||MPC||61.30||▲1.4||54.29||88.45||D W|
|Phillips 66||PSX||95.98||▼-2.6||78.44||123.97||D W|
|Valero Energy||VLO||84.63||▼-0.5||68.81||126.98||D W|
- Scotia Howard Weil 2019 Energy Conference kicks-off in New Orleans, LA
- Finance Minister Bill Morneau delivers speech at Economic Club in Calgary, AB
- IEA releases Global Energy & CO2 Status Report
- API Weekly Statistical Bulletin
- StatsCan Payroll, Earning and Hours (Jan 2019 data)
- StatsCan international balance of trade (Jun 2019 data)
- EIA Weekly Petroleum Status Report
- Last trading day for Henry Hub April contract
- US Q4/2018 GDP reading (third estimate)
- EIA Weekly Natural Gas Storage Report
- StatsCan Industrial Product and Raw Material Price Indexes (Feb 2019 data)
- StatsCan GDP by industry (Jan 2019 data)
- EIA Underground Natural Gas Working Storage Capacity
- Baker Hughes Weekly Rig Counts
- Last trading day for Brent May contract.