Oil prices tick higher, but energy stocks take a beating
Despite a decline on Friday, Brent and WTI managed gains of 1.0% and 0.5%, respectively, for the week.
Canadian Light and Western Canadian Select (WCS) declined about 0.7%, while Edmonton Condensate rose about 1%. Differentials were little changed.
Gasoline prices rose over 4%, due in part to a big decline in product inventories south of the border last week. Heating oil was roughly unchanged.
In natural gas markets, Henry hub rose 0.2%, while AECO gas posted a 6.2% gain.
This week's notable Canadian economic news:
- According to StatsCan, lower oil prices dragged Canada trade deficit to a record $4.6 billion in December. Total exports declined 3.8% to $46.3 billion, the fifth consecutive monthly decline. Energy exports fell 22% to $6.4 billion, the lowest since July 2016.
- Industrial capacity utilization fell from 82.8% in Q3 to 81.7% in the fourth quarter of last year. A slowdown in manufacturing and construction was mostly to blame. Oil and gas extraction, as well as power plants led to the upside.
- Canada added 55,900 jobs in February, led mostly by growth in Ontario. Over the past 12 months, the country has now added 369,000 jobs. The national unemployment rate was unchanged at 5.8%.
- The Bank of Canada kept interest rates unchanged this week, and warned the economy will likely be weaker than expected in the first half of this year. However, the BoC says it may still raise rates, eventually.
- After last week's dismal GDP data, the loonie took another leg lower this week, ending Friday down 0.9% at 74.54 cents.
This week's US economic news:
- The US economy added just 20,000 jobs in February, far short of the 180,000 positions that were expected.
- The jobless rate declined from 4.0% to 3.8% during the month, due to the end of January's government shutdown.
- Average hourly wages jumped to 3.4% on an annualized basis, the highest since 2009.
- The US trade deficit widened from US$50.3 billion in November to US$59.8 billion in December, the largest deficit since late 2008. Exports contracted 2%, while imports rose 2%.
- Despite the lacklustre economic data, the US dollar jumped almost 1% this week, mostly due to weakness in other global currencies.
Across the pond this week:
- Chinese exports declined 21% y/y in February, the worst performance since 2016, blamed on trade wars with the US and a weakening global economy. Imports also fell 5.2%, raising doubts on the strength of the domestic economy.
- ECB President Mario Draghi warned the European economy was in "a period of continued weakness and pervasive uncertainty," once again downgrading expectations for inflation and economic growth. The Bank's GDP growth forecast was cut from 1.7% to just 1.1% for 2019, while inflation is now expected at 1.2%, well below the ECB's 2% target. The central bank also announced a third tranche of cheap bank loans, to ensure sufficient market liquidity. The Euro declined 1.5% for the week.
- UK Prime Minister Theresa May takes another stab at passing a new-and-improved Brexit deal through parliament next week. The British pound also ended the week 1.5% lower.
Aside from London's FTSE, most global markets ended the week lower, as money rotated out of stocks and into treasuries.
In New York, the NYSE and NASDAQ both lost about 2.5%, while the S&P 500 declined 2.2%. In Toronto, the TSX fell 0.45%, its first weekly decline since the middle of December.
Energy was the worst performing sector on both sides of the border, falling 4.6% on the TSX and almost 4% on the S&P 500.
Among TSX energy names, select midstream stocks continue to outperform due to lower bond yields, with TransCanada and Pembina reaching 52-week highs during the week.
Most holdings with the SPX energy sector declined this week, with producers and energy services stocks posting the biggest losses. Kinder Morgan also hit a new 52-high during the week.
International oil majors listed on the NYSE also posted losses this week, due to a stronger US dollar.
|Suncor Energy||SU||43.70||▼-3.9||35.53||55.47||D W|
|Imperial Oil||IMO||36.54||▲3.1||33.43||44.91||D W|
|Husky Energy||HSE||13.94||▼-5.0||13.33||22.99||D W|
|Pembina Pipeline||PPL||48.99||▲0.2||37.60||49.92||D W|
|Inter Pipeline||IPL||21.67||▲0.0||18.60||25.66||D W|
|Gibson Energy||GEI||22.24||▲3.5||15.68||23.32||D W|
|LARGE CAP E&P|
|Cdn Natural Res||CNQ||35.85||▼-5.7||30.11||49.08||D W|
|Cenovus Energy||CVE||11.00||▼-9.5||8.74||14.84||D W|
|Vermilion Energy||VET||33.77||▼-0.4||26.67||49.67||D W|
|Pason Systems||PSI||20.06||▼-1.9||16.61||24.57||D W|
|Mullen Group||MTL||11.82||▼-6.0||11.26||16.93||D W|
|Secure Energy||SES||8.15||▼-5.2||6.25||9.44||D W|
|REFINING & MARKETING|
|Parkland Fuel||PKI||38.36||▼-4.3||27.96||47.45||D W|
|Exxon Mobil||XOM||79.01||▼-1.2||64.65||87.36||D W|
|Kinder Morgan||KMI||19.73||▼-0.1||14.62||20.01||D W|
|Williams Co||WMB||26.93||▼-1.8||20.36||32.22||D W|
|LARGE CAP E&P|
|EOG Resources||EOG||86.44||▼-10.4||82.04||133.53||D W|
|Occidental Petro||OXY||62.71||▼-7.2||56.83||87.67||D W|
|Anadarko Petro||APC||42.07||▼-5.2||40.40||76.70||D W|
|Pioneer Natural Res||PXD||130.36||▼-9.8||119.08||213.40||D W|
|Baker Hughes||BHGE||25.73||▼-5.1||20.09||37.76||D W|
|Ntl-Oilwell Varco||NOV||25.87||▼-10.1||24.27||49.08||D W|
|Marathon Petro||MPC||57.50||▼-8.3||54.29||88.45||D W|
|Phillips 66||PSX||94.31||▼-3.3||78.44||123.97||D W|
|Valero Energy||VLO||79.75||▼-3.8||68.81||126.98||D W|
- IHS CERAWeek kicks off in Houston, TX
- IEA releases Oil 2019 in Houston, TX
- UK Parliament votes on Brexit deal
- API Weekly Statistical Bulletin
- EIA Weekly Petroleum Status Report
- BoC Sr Deputy Gov Wilkins delivers speech in Vancouver, BC
- OPEC Monthly Oil Market Report
- EIA Weekly Natural Gas Storage Report
- IEA Monthly Oil Market Report
- Baker Hughes Weekly Rig Counts
- April contract expiry for WCS, Cdn Light, Edmonton Condensate and Synthetic Crude.