Cenovus Signs Oil-by-Rail Deals Amid Canadian Pipeline Pinch

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September 26, 2018, 5:11 PM CST Updated on September 27, 2018, 11:03 AM CST

Cenovus Energy Inc. signed deals to transport about 100,000 barrels a day of heavy crude by rail to the U.S. Gulf Coast from Alberta as a pipeline bottleneck depresses Canadian oil prices. The oil-sands producer agreed to three-year deals to ship oil to various destinations along the Gulf of Mexico, according to a statement Wednesday. Canadian National Railway Co. will move the crude from Cenovus’s Bruderheim Energy Terminal starting in the fourth quarter, while Canadian Pacific Railway Ltd. will ship out of USD Partner LP’s terminal in Hardisty beginning in the second quarter of next year.

“Our rail strategy provides a means of mitigating the price impact of pipeline congestion,” Alex Pourbaix, Cenovus chief executive officer, said in the statement. “While we remain confident new pipeline capacity will be constructed, these rail agreements will help get our oil to higher-price markets.”

Slow Train

Crude-by-rail export increases have slowed amid pipeline bottlenecks

The agreements were announced as a surge of new oil-sands production has filled pipelines to capacity. As a result of the bottleneck, Western Canadian Select heavy crude’s discount to West Texas Intermediate futures widened to $36 a barrel on Sept. 14, the most since late 2013. The discount narrowed 50 cents to $34 a barrel at 10:03 a.m. Calgary time on Thursday, data compiled by Bloomberg show. The Cenovus agreements would represent a boost of about 50 percent in crude-by-rail exports out of Canada, based on the most recent data from Canada’s National Energy Board. While Canada’s rail networks have served as a relief valve for transporting oil when pipelines are full, the pickup in crude-by-rail exports has been slow. Shipments out of the country rose one percent in July to over 206,000 barrels a day from June levels, the smallest increase since exports declined in February.

Cenovus said it’s expecting “all-in costs” per barrel to transport the oil from Alberta to the Gulf Coast to be “in the mid-to-high teens” in U.S. dollars. Shares of Cenovus rose as much as 7.8 percent on Thursday.

SOURCE: BLOOMBERG

TSX futures rise as oil hits four-year highs

September 25 (Reuters) - Stock futures pointed to a higher opening for Canada’s main stock index on Tuesday as oil prices touched four-year highs.

Upcoming U.S. sanctions on Iranian crude exports and the apparent reluctance of OPEC and Russia to raise output has pushed crude prices higher.

December futures on the S&P/TSX index were up 0.3 percent at 7:00 a.m. ET.

The Toronto Stock Exchange’s S&P/TSX fell 16.81 points, or 0.10 percent, to 16,207.32 on Monday.

Dow Jones Industrial Average e-mini futures were up 0.32 percent at 7:00 a.m. ET, while S&P 500 e-mini futures were up 0.26 percent and Nasdaq 100 e-mini futures were up 0.17 percent.

TOP STORIES

As the month-end deadline for North American trade talks nears, Canadian executives who hedge foreign exchange risk have been changing their strategies so their companies can profit from any possible swings in the Canadian dollar.

ANALYST RESEARCH HIGHLIGHTS

North American Construction Group Ltd. Canaccord Genuity raises price target to C$14 from C$11

Onex Corp. Canaccord Genuity cuts target price to C$108 from C$111

COMMODITIES AT 7:00 a.m. ET

Gold futures: $1,199.8; +0.2 pct

US crude: $72.51; +0.6 percent

Brent crude: $82.04; +1.03 percent

U.S. ECONOMIC DATA DUE ON TUESDAY

0900 (approx.) Monthly home price mm for Jul: Prior 0.2 pct

0900 (approx.) Monthly home price yy for Jul: Prior 6.5 pct

0900 (approx.) Monthly Home Price Index for Jul: Prior 264

0900 Caseshiller 20 mm SA for Jul: Expected 0.1 pct; Prior 0.1 pct

0900 Caseshiller 20 mm NSA for Jul: Expected 0.5 pct; Prior 0.5 pct

0900 Caseshiller 20 yy for Jul: Expected 6.2 pct; Prior 6.3 pct

1000 Consumer Confidence for Sep: Expected 132; Prior 133.4

1000 Rich Fed Composite Index for Sep: Prior 24

 

1000 Rich Fed, Services Index for Sep: Prior 31

1000 Rich Fed Manufacturing Shipments for Sep: Prior 23

1030 (approx.) Texas Service Sector Outlook for Sep: Prior 21.5

1030 (approx.) Dallas Fed Services Revenues for Sep: Prior 21.5

Canadian markets directory ($1 = C$1.29) (Reporting by Nayyar Rasheed in Bengaluru; Editing by Arun Koyyur)



SOURCE: REUTERS

Canada heavy crude discount hits widest level on record

(Reuters) - The Canadian heavy oil differential closed at its widest point on record against the West Texas Intermediate (WTI) benchmark on Monday in thin trade, as transportation constraints continued to weigh.

Western Canada Select (WCS) heavy blend crude for October delivery in Hardisty, Alberta, settled at $42.00 a barrel below the WTI benchmark crude futures CLc1, compared with Friday’s settle of $41.00, according to Shorcan Energy brokers.

Higher production compared with the second quarter has swelled volumes in storage and put pressure on prices, while tight pipeline space and insufficient rail capacity have pushed the differential even wider, say analysts.

Some of the recent price weakness can be attributed to leftover barrels stranded by Canada’s pipeline apportionment system, where shippers nominate a certain volume of barrels but see their shipments reduced if lines are oversubscribed.“Often what we see post-apportionment is simply weak pricing in the aftermarket,” said Matt Murphy, an energy analyst with Tudor, Pickering, Holt & Co.

Murphy noted that rail volumes continue to rise, but still appear to be insufficient to clear the market.

A jump in the global benchmark for crude also weighed on the Canadian prices, with Brent LCOc1 rising 3 percent to a four-year high above $80 a barrel after Saudi Arabia and Russia ruled out any immediate increase in production.

The transportation constraints mean Canadian producers are not able to get their barrels to market, leaving them unable to fully benefit from rising benchmark prices.

Monday’s WCS close surpasses a previous record discount of $41.50 reached in November 2013.

Reporting by Julie Gordon in Vancouver; Editing by Leslie Adler and Matthew Lewis

SOURCE: REUTERS

Futures rise on higher oil prices, trade fears limit gains

Sept 17 (Reuters) - Stock futures for Canada’s main index rose on Monday as energy shares gained on the back of rising oil prices, but the rise was capped by lingering U.S.-China trade war fears.

Oil rose as investors focused on the impact of U.S. sanctions on Iran despite assurances by Washington that Saudi Arabia, Russia and the United States could together raise output fast enough to offset falling supplies.

Brent crude oil was up 50 cents a barrel at $78.59 by 1055 GMT. U.S. light crude was up 50 cents at $69.49.

China will not be content to only play defence in an escalating trade war with the United States, a widely read Chinese tabloid warned, as U.S. President Donald Trump was expected to announce new tariffs on $200 billion in Chinese goods as early as Monday.

Data on foreign investment in Canadian securities and Canadian investment in foreign securities are due at 08:30 a.m. ET

The Toronto Stock Exchange’s S&P/TSX closed 0.07 percent higher, at 16,013.49 on Friday.

Dow Jones Industrial Average e-mini futures were down 0.07 percent at 7:15 a.m. ET, while S&P 500 e-mini futures were down 0.11 percent and Nasdaq 100 e-mini futures were down 0.16 percent.

TOP STORIES

Canadian miner RNC Minerals recovered a 43-kg specimen stone containing an estimated 1,100 ounces of gold and a second 7-kg specimen containing 190 ounces from Beta Hunt Mine in Australia.

USD Partners LP has begun expansion work at one of Canada’s largest crude by rail loading terminals, which will boost capacity at the facility by 50 percent and be completed by year end, the head of the company’s Canada unit told Reuters.

ANALYST RESEARCH HIGHLIGHTS

Nighthawk Gold Corp: Canaccord Genuity raises rating to speculative buy from hold; raises price target to C$0.60 from C$0.55

Alaris Royalty Corp: CIBC raises price target to C$19 from C$18

COMMODITIES AT 7:15 a.m. ET

Gold futures: $1201; fell 0.01 percent

US crude: $69.53; rose 0.78 percent

Brent crude: $78.72; rose 0.81 percent

LME 3-month copper: $5885.5; fell 1.46 percent

Reporting By Sourav Bose in Bengaluru; Editing by Arun Koyyur

 

SOURCE: REUTERS

Canadian dollar steadies ahead of trade news as investors bet on volatility

TORONTO (Reuters) - The Canadian dollar was little changed against its U.S. counterpart on Monday as investors sat tight ahead of potential news on trade after buying option structures in recent days that could profit from increased volatility in the currency.

U.S. President Donald Trump said he would announce his latest plan on China tariffs after the markets close, with expectations he would level them on about $200 billion of Chinese imports.

Canada runs a current account deficit, so its economy could be hurt if the global flow of trade or capital slows.

The country has its own trade feud with the United States and is also in talks to revamp the North American Free Trade Agreement.

“There are quite a few names that are sitting on long butterfly positions, so they’ll make money if it (the Canadian dollar) moves up or down,” said Simon Côté, managing director, risk management solutions, National Bank Financial. “We just need a decent move either way before they take profit or restructure what they have.”

At 3:27 p.m. (1927 GMT), the Canadian dollar CAD=D4 was trading nearly unchanged at 1.3029 to the greenback, or 76.75 U.S. cents. The currency, which rose nearly 1 percent last week, traded in a range of 1.3002 to 1.3048.

The price of oil, one of Canada’s major exports, dipped as the market weighed deepening trade tension that is expected to dent global crude demand and potential supply tightening due to Iran sanctions. U.S. crude oil futures CLc1 settled 0.1 percent lower at $69.91 a barrel.

The U.S. dollar .DXY retreated as sterling and the euro were boosted by optimism that Britain would reach a deal with the European Union on the terms of its departure from the bloc.

Foreign investors bought a net C$12.65 billion in Canadian securities following a revised C$10.30 billion total purchase in June, while Canadian investment in foreign securities also climbed, data from Statistics Canada showed.

In separate data, resales of Canadian homes rose 0.9 percent in August from July, notching the fourth straight monthly rise but remaining below the highs seen in recent years, the Canadian Real Estate Association said.

Canadian government bond prices edged higher across the yield curve, with the 10-year CA10YT=RR rising 3 Canadian cents to yield 2.342 percent. Still, the 10-year yield held near its highest level in nearly six weeks.

Canada’s inflation report for August and July retail sales data are due on Friday.

Reporting by Fergal Smith; Editing by Paul Simao and Alistair Bell

SOURCE: REUTERS

USD Partners moving ahead with Canada crude by rail expansion

(Reuters) - USD Partners LP has begun expansion work at one of Canada’s largest crude by rail loading terminals, which will boost capacity at the facility by 50 percent and be completed by year end, the head of the company’s Canada unit told Reuters.

The expansion at Hardisty, Alberta, will increase loading capacity to three 120-car unit trains per day, or roughly 225,000 barrels, to meet strong demand from both producers and refinery customers amid pipeline bottlenecks, said Jim Albertson, senior vice president, Canadian Business Unit, for parent USD Group.

The group operates a network of oil and fuel loading, unloading and storage terminals across North America.

“We have started the process of expanding the (Hardisty) terminal by the equivalent of one train a day. That is planned to be, by the year end, in commission,” he said in an interview on Friday, declining to say how much the expansion would cost.

The terminal currently has loading capacity for two 120-car unit trains per day.

The expansion comes at time when new pipeline projects are facing long delays and the discount on Canadian oil has widened to its biggest spread in nearly five years.

Canada’s crude by rail exports hit a record of nearly 205,000 barrels per day (bpd) in June as rising oil production in Western Canada has outstripped pipeline capacity. Exports are expected to top 300,000 bpd by year-end and continue rising in 2019 as producers and railways sign transport deals.

Houston-based USD’s plan will add a second set of loading arms and a new inside loop, allowing trains to be loaded from both sides of the existing rack at once, Albertson said.

Loading terminals are needed to get the oil onto the trains.

USD Partners said last month that it was “evaluating a potential expansion” at Hardisty, a major Canadian oil hub northeast of Calgary, due to strong customer demand, but it has not previously confirmed the project was moving ahead.

Albertson said that partner Gibson Energy Inc will be ready to flow higher volumes of oil to the facility by year-end and that railway operator Canadian Pacific Railway Ltd is also on board, though the shift to three trains per day will not be immediate.

“The ramp-up will be very gradual in the first quarter (of 2019), which will allow us to make sure that everything is seamless on the loading and outbound operations,” said Albertson.

A spokesman for Gibson declined to comment on the project status but said the company would be ready to supply increased volumes of crude as soon as needed.

A spokesman for CP said the railway is committed to ensuring that any new volume tendered for shipment on the railway, whether oil or other commodities, are supported through close alignment with its operations and network capacity.

Reuters reported this month that major oil producer Cenovus Energy Inc had signed a deal with Canadian National Railway Co to move more crude by rail.

USD canceled a previous planned expansion at Hardisty in 2016, which would have doubled capacity to four unit trains per day. That expansion would have required major new infrastructure and a federal environmental review.

($1 = 1.3034 Canadian dollars)

 

Reporting by Julie Gordon in Vancouver; editing by Jonathan Oatis



SOURCE: REUTERS

Duncan Comments on Crescent Point Announcement

Crescent Point Energy announced Wednesday they would be reducing their workforce by 17 percent and making other changes as part of their new strategic plan.

Weyburn-Big Muddy MLA and Environment Minister Dustin Duncan said his thoughts are with the families affected by the layoffs, during an interview with Discover Weyburn News. Although he is not aware of anyone in the southeast directly affected by the layoffs at this time, he said he believes... READ MORE

TSX futures lower as oil slips; NAFTA talks in focus

Sept 5 (Reuters) - Futures pointed to a lower opening for Canada’s main stock index on Wednesday as oil prices fell after a tropical storm hitting the U.S. Gulf coast weakened, and ahead of a fresh round of North Atlantic Free Trade Agreement (NAFTA) negotiations.

Canada heads into talks in Washington to renew NAFTA determined not to back down on key issues despite threats from U.S. President Donald Trump to retaliate against the Canadian economy unless Ottawa gives ground quickly.

The reduced impact of Storm Gordon, which deviated away from oil-producing areas, helped offset support from forecasts of lower U.S. inventories and sanctions against Iran.

September futures on the S&P/TSX index were down 0.25 percent at 7:05 a.m. ET.

The Bank of Canada announces its interest rate decision at 10:00 am ET, while trade balance numbers are due at 08:30 a.m. ET.

The Toronto Stock Exchange’s S&P/TSX fell 101.58 points, or 0.62 percent, to 16,161.30 on Tuesday.

Dow Jones Industrial Average e-mini futures were down 0.3 percent at 7:10 a.m. ET, while S&P 500 e-mini futures were down 0.21 percent and Nasdaq 100 e-mini futures were down 0.25 percent.

TOP STORIES

Canada’s auto sales fell for the sixth straight month in August, as rising interest rates put a damper on demand for new cars.

Crescent Point Energy Corp named Craig Bryksa its new chief executive officer and said it would immediately reduce 17 percent of its workforce as the Canadian energy producer looks to turn around its business.

China’s Zijin Mining Group Co will buy Canadian gold and copper miner Nevsun Resources Ltd for about C$1.86 billion the companies said on Wednesday, after Nevsun rejected multiple bids from rival Lundin Mining Corp.

ANALYST RESEARCH HIGHLIGHTS

CRH Medical Corp : RBC raises target price to C$5.5 from C$5

COMMODITIES AT 7:10 a.m. ET

Gold futures: $1,194.8; rose 0.07 pct GOL/

US crude: $68.99; down 1.26 pct O/R

Brent crude: $77.40; down 0.99 percent O/R

U.S. ECONOMIC DATA DUE ON WEDNESDAY

0830 International trade for July: Expected -$50.3 bln; Prior -$46.3 bln

0830 Goods trade balance (R) for July: Prior -72.20 bln

0945 ISM-New York Index for Aug: Prior 797.5

0945 ISM New York Business Conditions for Aug: Prior 75.0

(Reporting by Debanjan Bose in Bengaluru; Editing by Sriraj Kalluvila)

SOURCE: REUTERS

CANADA STOCKS-TSX futures lower as oil slips; NAFTA talks in focus

Sept 5 (Reuters) - Futures pointed to a lower opening for Canada’s main stock index on Wednesday as oil prices fell after a tropical storm hitting the U.S. Gulf coast weakened, and ahead of a fresh round of North Atlantic Free Trade Agreement (NAFTA) negotiations.

Canada heads into talks in Washington to renew NAFTA determined not to back down on key issues despite threats from U.S. President Donald Trump to retaliate against the Canadian economy unless Ottawa gives ground quickly.

The reduced impact of Storm Gordon, which deviated away from oil-producing areas, helped offset support from forecasts of lower U.S. inventories and sanctions against Iran.

September futures on the S&P/TSX index were down 0.25 percent at 7:05 a.m. ET.

The Bank of Canada announces its interest rate decision at 10:00 am ET, while trade balance numbers are due at 08:30 a.m. ET.

The Toronto Stock Exchange’s S&P/TSX fell 101.58 points, or 0.62 percent, to 16,161.30 on Tuesday.

 

Dow Jones Industrial Average e-mini futures were down 0.3 percent at 7:10 a.m. ET, while S&P 500 e-mini futures were down 0.21 percent and Nasdaq 100 e-mini futures were down 0.25 percent.

TOP STORIES

Canada’s auto sales fell for the sixth straight month in August, as rising interest rates put a damper on demand for new cars.

Crescent Point Energy Corp named Craig Bryksa its new chief executive officer and said it would immediately reduce 17 percent of its workforce as the Canadian energy producer looks to turn around its business.

China’s Zijin Mining Group Co will buy Canadian gold and copper miner Nevsun Resources Ltd for about C$1.86 billion the companies said on Wednesday, after Nevsun rejected multiple bids from rival Lundin Mining Corp.

ANALYST RESEARCH HIGHLIGHTS

CRH Medical Corp : RBC raises target price to C$5.5 from C$5

Laurentian Bank Of Canada: Barclays cuts target price to C$49 from C$52

COMMODITIES AT 7:10 a.m. ET

Gold futures: $1,194.8; rose 0.07 pct GOL/

US crude: $68.99; down 1.26 pct O/R

Brent crude: $77.40; down 0.99 percent O/R

U.S. ECONOMIC DATA DUE ON WEDNESDAY

0830 International trade for July: Expected -$50.3 bln; Prior -$46.3 bln

 

0830 Goods trade balance (R) for July: Prior -72.20 bln

0945 ISM-New York Index for Aug: Prior 797.5

0945 ISM New York Business Conditions for Aug: Prior 75.0

 (Reporting by Debanjan Bose in Bengaluru; Editing by Sriraj Kalluvila)

 

SOURCE: REUTERS

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