FINANCIAL POST
CANADIAN OIL PRODUCERS MISSING PRICE REBOUND.
• Crude oil prices are at a two- year high, but out- of- luck Canadian producers are missing out on the rebound.
The West Texas Intermediate benchmark oil price rose Thursday to US$58.25 per barrel, marking the second day North American oil prices had traded over US$ 58 since the summer of 2015. But the discount on Canadian oil has worsened after TransCanada Corp. shutdown its Keystone mainline after an oil spill last week, choking off a vital conduit connecting Alberta to American refineries. The pipeline, built 10 years ago, carries 590,000 barrels of oil per day from Alberta to an important hub in Oklahoma.
Trans Canada discovered a 5,000-barrel leak days before regulators in Nebraska approved Keystone XL on Monday — a new pipeline that would expand the existing Keystone system. The shutdown is pushing differentials between Canadian and American benchmarks wider on worries about a glut of crude building up in Alberta. The Canadian heavy oil benchmark was trading at US$ 17.25 discount to the U.S. crude benchmark Thursday — its widest since August 2015, according to Bloomberg data. The average differential between the two benchmarks this year has stood at around US$11.70.
“The change in the differential is largely attributed to the Keystone pipeline being temporarily shut down,” Alta-Corp Capital analysts said in a research note this week.
As a result, major oil companies in Calgary have been forced to put more production into storage tanks, or find alternative ways to ship their crude.
Tudor, Pickering and Holt analysts said in a Monday research note the pipeline’s outage creates “potential for weakness in fourth quarter oil--
Canada’s main stock index finished on a near flat note Thursday, as U.S. stock markets were closed for their Thanksgiving holiday.
The S&P/TSX composite index scraped out 0.72 of a point to advance to 16,074.30.
Earlier in the day, the materials and energy sectors had helped push the Toronto market up modestly, as the healthcare and consumer staples groups lost ground.
“The positive performance this morning was the result of the resource sector. Both energy and materials were stronger on the day,” said Candice Bangsund, vicepresident and portfolio manager at Fiera Capital. “In energy markets we’re seeing encouraging signs toward the rebalancing of the crude market. So we saw energy prices soar to a two-year high this week after a report that indicated a decline in U.S. stockpiles, while there’s also been a disruption in the Keystone pipeline that has helped to sort of boost that optimism that the market is going to find a better balance.”
In currency markets, the Canadian dollar was trading at an average price of 78.65 cents US, up 0.09 of a U.S. cent. That marked the loonie’s third straight day of gains. Key drivers of the currency’s recent upswing are the weakening U. S. dollar and bullishness around the price of oil, which rose $1.19 at the closing of markets Wednesday.
Commodities markets were also closed for the U.S. Thanksgiving holiday.
In economic news, Statistics Canada reported retail sales in September were up 0.1 per cent to $ 49.1 billion for the month, boosted by sales at gasoline stations as prices climbed due to disruptions caused by hurricane Harvey. Economists however said it appears consumer spending has cooled after a hot start to the year.
Meanwhile, European stocks erased early losses to close little changed as positive economic data in the region offset negative sentiment following a slump in Chinese equities.
The Stoxx Europe 600 struggled for traction amid mixed regional benchmarks and a stronger euro. The common currency headed for a five-week high after data showed the euro-area economy picked up momentum in November and as Germany’s Social Democrat party was said to be open to talks with Chancellor Angela Merkel.