Canadian energy stocks swing up

Fears of ‘demand destruction’ on decline

Oil prices shot up on Friday amid a profusion of positive news, including signs that an economic recovery is underway, and indications a fractious oil cartel led by Saudi Arabia would meet this weekend to extend production cuts.

The fresh batch of positive news boosted a number of battered Canadian oil and gas stocks.

Husky Energy I nc. climbed 16.4 per cent to $ 5.33, Suncor Energy Inc. rose 10.5 per cent to $ 28.57, Cenovus Energy Inc. was up 8.5 per cent to $ 7.05, Imperial Oil Ltd. was up 5.19 per cent to $24.74, and Canadian Natural Resources Ltd. rose 5.3 per cent to $28.86.

Smaller players Surge Energy Inc., up 30.6 per cent, Baytex Energy Corp., up 25.4 per cent, and Athabasca Oil Corp., up 18.4 per cent, also enjoyed a spike as the rally lifted most energy stocks.

The S& P Capped Energy Index led the wider TSX market, up 7.9 per cent on the day. The energy index remains down 41.4 per cent year to date.

The gains were attributed to a number of factors including a stronger than expected jobs report on Friday. Canada added 290,000 jobs, while the United States saw 2.5 million jobs created last month.

The Organization of the Petroleum Exporting Countries and its allies also helped the run by pushing up their next meeting to Saturday. The move raises speculation that Saudi Arabia, Russia and other major oil producers would extend record production cuts and help bring the oil sector into balance, after social distancing measures related to the coronavirus pandemic destroyed demand for oil.

The positive momentum pushed U.S. West Texas Intermediate index higher for the sixth straight week. The benchmark North American index jumped nearly five per cent on Friday to US$ 39.71 per barrel — a level at which many Canadian oil producers can break even. Brent crude futures settled up US$ 2.31, or 5.8 per cent, at US$ 42.30 a barrel, surging 19.2 per cent on the week.

Western Canadian Select crude was up nearly 10 per cent, crossing US$ 30 per barrel for the first time since early March.

In the U. S., the S& P 500 Energy Index soared 7.5 per cent on the day, with Occidental Petroleum Corp. soaring 33 per cent, Apache Corp. up 23.6 per cent and Marathon Oil Corp. rising 17.5 per cent on the day.

“I wouldn’t say the bulls are back,” Phil Skolnick, an analyst at Eight Capital said. “But people are getting bullish, and getting positive.”

During the pandemic, global oil demand dropped by about 23 million barrels per day in April, with aviation demand dropping 70 per cent, and gasoline demand dropping 50 per cent, according to Skolnick.

“We’re now coming out of that period of demand destruction.”