Oil prices lock in 30% gain for the first quarter

Oil prices lock in 30% gain for the first quarter

This week's Energy Market Summary for the week ending Friday March 29, 2019:
  • Alberta's curtailment program dents January GDP
  • Oil prices post best quarterly gain since Q2/2009
  • WTI tops US$60 for the first time since November
  • Cdn Light tops US$55 for the first time since September
  • Backwardation steepens on Brent futures
  • US threatens sanctions on Russia ...
    ... for violating sanctions on Venezuela.
WHAT'S MOVING OIL PRICES THIS WEEK
GEOPOLITICS
BULLISH
  • The Trump Administration is warning Russia against supporting the current Venezuelan regime, threatening the Russians with sanctions. The US is accusing the Soviets of shipping weapons and military personnel to Caracas, in support of President Maduro.
  • Still in Venezuela, the US is reminding buyers of Venezuelan crude that they are actively monitoring the country's export terminals, and buyers should be careful not to violate US sanctions. Better yet, the US says it would prefer everyone stops purchasing Venezuelan crude and find an alternative supply.
USD INDEX
BEARISH
  • The US dollar gained 0.7% this week, mostly due to weakness in other foreign currencies.
SUPPLY
NEUTRAL
  • According to Baker Hughes, US drillers took 8 oil rigs out of service this week, ending Friday at 816. Despite the recent decline, US output held steady at 12.1 million bbl/day last week.
  • Canada lost another 14 oil rigs, ending the week at just 35.
DEMAND
NEUTRAL
  • No new news on the demand front this week.
SENTIMENT
BULLISH
  • Traders have turned very bullish on WTI managed money futures, raising long positions by 23 million contracts and reducing short positions by 18 million contracts. Brent also saw a small increase in net longs.
  • Backwardation widened on Brent futures this week, indicative of a short-term supply squeeze. WTI remains in contango, although spreads have been narrowing since mid-February.
  • Market technicals look strong for both Brent and WTI, as both benchmarks continue to slowly gain ground, now returning to the levels of last fall.
OIL MARKETS
STREAM CLOSE %CHG L 52WK H
BRENT$68.39▲2.050.47
 
86.29
WTI$60.14▲1.942.53
 
76.41
CDN LT$55.39▲2.537.04
 
71.40
C5+$55.94▲3.520.83
 
69.32
WCS$50.74▲2.412.59
 
56.21

Both Brent and WTI gained about 30% in the first quarter of this year, the best quarterly showing since the second quarter of 2009.

 
us-inventory-report.jpg

WEEKLY US INVENTORY REPORT

MAR 27, 2019

Product stockpiles continue to shrink, falling another 5 million barrels last week

 
CRUDE OIL FUTURES CURVES
BRENT
WTI
█ OIL PRICE (USD/BBL)   █ MONTH 5 VS NEAR MONTH
MANAGED MONEY: FUTURES & OPTIONS
BRENT
WTI
█ OIL PRICE (USD/BBL)   █ LONG   █ SHORT █ NET LONG (1000 BBL CONTRACTS)
CURRENCIES & BONDS

This week's notable Canadian economic news:

  • Real GDP expanded 0.3% in January, better than economists were expecting, and offsetting contractions from the previous two months.
  • Non-durable manufacturing led to the upside, gaining almost 2% due to gains made in food, chemicals and petroleum products.
  • Oil and gas extraction fell 2.6% in January, due mostly to a 4.1% decline in oil sands extraction, precipitated by Alberta's curtailment program.
  • After three months of declines, the Industrial Product Price Index (IPPI) rose 0.3% in February. Gasoline, light fuel oils, diesel and chemical products contributed to most of the gains. Year-over-year, IPPI is now up 1.2%.
  • The Raw Materials Price Index (RMPI) rose 4.6% in February, due primarily to a 9% increase in crude prices. Year-over-year, RMPI is still down 0.6%.
  • Canada's merchandise trade deficit narrowed from $4.8 billion in December to $4.2 billion in January. Exports rose 2.9% to $47.6 billion, the first increase since July 2018. Crude exports rose 37%, mainly due to higher prices. Imports rose 1.5% to a record $51.8 billion, mainly due to higher aircraft purchases.
  • Average weekly earnings were unchanged in January at $1,012. Year-over-year, payrolls are up 2.0% with all provinces posting gains, except Saskatchewan.
  • Better than expected GDP data sent bond yields and the Canadian dollar higher this week.

This week's US economic news:

  • Fouth quarter GDP grew at an annualized rate of 2.2%, down from a previous estimate of 2.6%, and slightly less than economists were expecting.
  • The US trade deficit narrowed from US$60 billion in December to US$51 billion in January. Exports rose 0.9%, while imports declined 2.6%.
  • US bond yields dipped lower again this week, briefly inverting the 3-month vs 10-year yield curve.
  • Despite lower bond yields, the US dollar moved up 0.7%, primarily due to weakness in other global currencies.

Across the pond this week:

  • UK lawmakers rejected Prime Minister Theresa May’s Brexit deal for a third time on Friday, increasing the risk of a hard-Brexit on April 12. Another vote is scheduled for next week.
  • The ongoing drama took a toll on both the pound and Euro this week, each falling 1.7% and 0.6% respectively.
  • Global bond yields also took a tumble this week. Rates on German and Japanese 10-year notes sank further into negative territory, while the UK 10-year fell below 1%.
EQUITY MARKETS

    TSX SECTORS
52-WK
    SPX SECTORS
52-WK

Except for Japanese and Chinese exchanges, most global equity markets posted gains for the week, shrugging off concerns over an inverted US yield curve.

In New York, the NYSE gained 1.3% while the S&P 500 rose 1.2%. Except for utilities stocks, most other sectors ended the week in the green.

In Toronto, the TSX rose just 0.1%, dragged lower by a poor showing among the heavily weighted financials and energy sectors.

ENERGY SECTOR PERFORMANCE
TSX ENERGY SUBSECTORS
SPX ENERGY SUBSECTORS

The TSX energy sector lost 2.2% this week, with losses seen across all subsectors. Integrated names Suncor Energy and Husky Energy dragged to the downside, as did heavy-weights Enbridge and TransCanada. Canadian energy services was the worst performing subsector.

On the S&P 500, energy rose 0.9%. Except for refining stocks, most other energy components posted gains for the week.

Almost all foreign ADRs listed on the NYSE declined this week, in part due to a stronger greenback. 

TSX ENERGY STOCKS
COMPANY TICKER CLOSE %CHG L 52WK H CHARTS
INTEGRATED
Suncor EnergySU43.31▼-4.235.53
 
55.47D   W
Imperial OilIMO36.48▲0.133.43
 
44.91D   W
Husky EnergyHSE13.25▼-2.513.24
 
22.99D   W
MIDSTREAM
EnbridgeENB48.40▼-1.637.36
 
49.70D   W
TransCanadaTRP60.02▼-1.147.90
 
61.47D   W
Pembina PipelinePPL49.09▼-1.037.60
 
50.45D   W
Inter PipelineIPL22.11▲1.518.60
 
25.66D   W
Keyera KEY31.51▲1.224.05
 
38.91D   W
Gibson EnergyGEI22.97▲0.415.90
 
23.63D   W
LARGE CAP E&P
Cdn Natural ResCNQ36.69▼-0.930.11
 
49.08D   W
Cenovus EnergyCVE11.60▼-1.48.74
 
14.84D   W
EncanaECA9.68▲2.76.90
 
18.54D   W
TourmalineTOU20.64▼-3.315.84
 
26.19D   W
Vermilion EnergyVET32.99▼-1.826.67
 
49.67D   W
SERVICES
Pason SystemsPSI19.50▼-2.816.61
 
24.57D   W
EnerflexEFX19.09▼-1.413.55
 
20.38D   W
Mullen Group MTL11.98▼-1.811.26
 
16.93D   W
ShawcorSCL20.01▼-6.815.11
 
28.89D   W
Secure EnergySES8.18▼-1.76.25
 
9.44D   W
REFINING & MARKETING
Parkland FuelPKI40.83▲3.227.96
 
47.45D   W
S&P 500 ENERGY STOCKS
COMPANY TICKER CLOSE %CHG L 52WK H CHARTS
INTEGRATED
Exxon MobilXOM80.80▲0.464.65
 
87.36D   W
ChevronCVX123.18▲0.1100.22
 
131.08D   W
MIDSTREAM
Kinder MorganKMI20.01▲0.614.62
 
20.44D   W
Williams CoWMB28.72▲0.920.36
 
32.22D   W
ONEOKOKE69.84▲1.250.26
 
71.99D   W
LARGE CAP E&P
ConocoPhillipsCOP66.74▲1.056.57
 
80.24D   W
EOG ResourcesEOG95.18▲1.682.04
 
133.53D   W
Occidental PetroOXY66.20▲1.556.83
 
87.67D   W
Anadarko PetroAPC45.48▲5.240.40
 
76.70D   W
Pioneer Natural ResPXD152.28▲8.3119.08
 
213.40D   W
SERVICES
SchlumbergerSLB43.57▲2.634.99
 
75.43D   W
HalliburtonHAL29.30▲2.024.70
 
54.91D   W
Baker HughesBHGE27.72▲2.120.09
 
37.76D   W
Ntl-Oilwell VarcoNOV26.64▲0.024.27
 
49.08D   W
TechnipFMCFTI23.52▲3.818.20
 
34.39D   W
REFINERS
Marathon PetroMPC59.85▼-2.454.29
 
88.45D   W
Phillips 66PSX95.17▼-0.878.44
 
123.97D   W
Valero EnergyVLO84.83▲0.268.81
 
126.98D   W
HollyFrontierHFC49.27▼-2.646.75
 
83.28D   W
NYSE ADR ENERGY STOCKS
COMPANY TICKER CLOSE %CHG L 52WK H CHARTS
Royal Dutch ShellRDS.A62.59▼-0.555.04
 
73.86D   W
TotalTOT55.65▼-0.649.70
 
65.69D   W
BPBP43.72▼-0.536.28
 
47.83D   W
EniE35.24▼-0.629.75
 
40.15D   W
EquinorEQNR21.97▼-2.419.95
 
28.93D   W
NEXT WEEK'S EVENTS

Monday:

  • BoC Governor S. Poloz gives speech at Nunavut Mining Symposium in Iqaluit, NU

Tuesday:

  • API Weekly Statistical Bulletin

Wednesday:

  • Teck Analyst Day in Toronto, ON
  • EIA Weekly Petroleum Status Report

Thursday:

  • EIA Weekly Natural Gas Storage Report

Friday:

  • StatsCan Labour Force Survey (Mar 2019 data)
  • Baker Hughes Weekly Rig Counts
LATEST ENERGY NEWS
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
  • Canadian crude prices rise with global benchmarks, gaining 8% for the week

    Canadian crude prices rise with global benchmarks, gaining 8% for the week

    Oil prices old steady despite fears of a global slowdown

    Oil prices old steady despite fears of a global slowdown

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