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The price on the futures contract for West Texas crude that is due to expire Tuesday fell into\u00a0negative territory\u00a0\u2014 minus $37.63 a barrel. Yet the S&P 500 Energy Index fell just 3.3%, the most since last Thursday, and even posted a brief gain earlier in the session. Leading decliners Occidental Petroleum Corp. and Pioneer Natural Resources Co. posted drops in the single digits. In Canada, Toronto\u2019s energy gauge fell 0.6%.<\/p>\n
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Traders are getting off of the May contract \u201cat all costs,\u201d said Patrick O\u2019Rourke, an analyst at AltaCorp Capital. Equities might be pricing in some form of recovery, while a risk remains that the June crude contract could trade similar to May\u2019s, O\u2019Rourke said.<\/p>\n
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\u201cThe market is being overly optimistic about the future contracts beyond the current month, thus holding the equities up,\u201d said Rafi Tahmazian, a senior portfolio manager at Canoe Financial.<\/p>\n
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After a lackluster\u00a0OPEC meeting\u00a0earlier this month, Tahmazian now sees the free market at play to re-balance oil prices, while higher-cost and debt-ridden producers will be left in the weeds. He sees an underlying benefit for Canadian energy stocks, while U.S. firms continue to suffer.<\/p>\n
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\u201cWe think that it will play well for Canadian equities as our dry gas producers will benefit from associated gas shut-ins, and the vast majority of our oil production is lower decline so it would not be categorized as high cost,\u201d he added.<\/p>\n
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Shares of Canadian natural gas producers Tourmaline Oil Corp. and ARC Resources Ltd. were among the leaders Monday, both up over 5%. U.S. gas drillers also rallied with JPMorgan seeing \u201cmore legs\u201d in the trade.<\/p>\n
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Tourmaline is O\u2019Rourke\u2019s top pick. There\u2019s been strength in the natural gas curve resulting from the decline in oil, he said, to the benefit of gas companies. The enthusiasm comes with some caution, however, as \u201cthere\u2019s a lot of gas throughout North America.\u201d<\/p>\n
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Meanwhile, in addition to oil\u2019s oversupply and lack of global crude demand, some investors are attempting to call a bottom. \u201cThe end to the oil bloodbath is in sight,\u201d said Eric Nuttall, a portfolio manager at Ninepoint Partners in Toronto.<\/p>\n
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\u201cAt some point energy stocks will begin to diverge from weak short-term pricing as the market starts to look beyond Covid-19 to a significantly tighter market,\u201d he added.<\/p>\n
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Cost-slashing measures across the sector continue, with Halliburton Co.\u00a0setting\u00a0full-year 2020 capital outlays at $800 million, 33% below previous guidance and the first sub-$1 billion budget since the depths of the last crash in 2016.<\/p>\n
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Meanwhile, tanker stocks including Teekay Corp. and Nordic American Tankers Ltd. advanced over 19% Monday, as Benchmark Middle East-China tanker rates increased 5.2%, according to Baltic Exchange data.<\/p>\n
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And as exploration & production earnings near, first-quarter results are going to be hit by lower price realizations, profitability and cash flow due to the slide in benchmarks and weaker demand related to Covid-19, according to Bloomberg Intelligence.<\/p>\n
gCaptain<\/p>\n","protected":false},"excerpt":{"rendered":"
The price on the futures contract for West Texas crude that is due to expire Tuesday fell into\u00a0negative territory\u00a0\u2014 minus $37.63 a barrel. Yet the S&P 500 Energy Index fell just 3.3%, the most since last Thursday, and even posted a brief gain earlier in the session. Leading decliners Occidental Petroleum Corp. and Pioneer Natural …<\/p>\n","protected":false},"author":1,"featured_media":8351,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[56],"tags":[2370,5094,5095,1194,166,2494,3200,198],"class_list":["post-8350","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-marine-world","tag-energy","tag-equities","tag-hang","tag-negative","tag-oil","tag-price","tag-surge","tag-tankers"],"_links":{"self":[{"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/posts\/8350","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/comments?post=8350"}],"version-history":[{"count":0,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/posts\/8350\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/media\/8351"}],"wp:attachment":[{"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/media?parent=8350"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/categories?post=8350"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.al-sindbad.net\/rest\/wp\/v2\/tags?post=8350"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}