Energy Summary for March 22, 2018

by Stockwatch Business Reporter

West Texas Intermediate crude for May delivery lost 87 cents to $64.30 on the New York Merc, while Brent for May lost 56 cents to $68.91 (all figures in this para U.S.). Western Canadian Select traded at a discount of $24.60 to WTI ($39.70), unchanged. Natural gas for April lost two cents to $2.62. The TSX energy index lost 4.27 points to 175.94.

Alberta producer Cenovus Energy Inc. (CVE) fell 64 cents to $10.88 on 17.53 million shares, after revealing that it has been operating at reduced production rates in the oil sands since last month. The company explained this morning that it has been storing some oil rather than selling it, because of pipeline capacity constraints. Like many other Western Canadian producers, Cenovus cannot get all of its oil out to the market. Because of these transportation bottlenecks, WCS oil is selling at a large discount to WTI oil. For most of July, 2017, the price differential was less than $10 (U.S.). It gradually widened, and in early February it reached a four-year high of $30.70 (U.S.). It did not help that in November, TransCanada temporarily shut down part of its Keystone pipeline, following a 5,000-barrel oil spill in South Dakota. (For context, the pipeline transports 600,000 barrels of oil a day.) Environmental activists, such as those currently protesting in Burnaby, B.C., against Kinder Morgan's proposed Trans Mountain pipeline expansion, relish pointing to incidents such as that one involving Keystone.

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