Oil Field News

CANADA FX DEBT-C$ hits two-week low on lower oil, soft data

 * Canadian dollar at C$1.3185, or 75.84 U.S. cents
    * Loonie touches weakest since Feb. 7 at C$1.3210.
    * Bond prices higher across the yield curve

    By Fergal Smith
    TORONTO, Feb 22 The Canadian dollar weakened to
a two-week low against its U.S. counterpart on Wednesday,
pressured by falling oil prices and broader gains for the
greenback along with the biggest drop in domestic retail sales
in nine months.
    Canadian retail sales unexpectedly declined 0.5 percent in
December as consumers bought fewer new cars and spent less
during the holiday shopping season, data from Statistics Canada
showed. Economists had expected retail sales to be unchanged.
    "It's generally soft data," said Andrew Kelvin, senior rates
strategist at TD Securities.  
    It reinforces the view that the Bank of Canada will not be
following the Federal Reserve with interest rate hikes, he
    The chances of a Bank of Canada interest rate hike this year
dipped to 25 percent from more than 30 percent before the retail
sales report, data from the overnight index swaps market showed.
    U.S. crude        prices were down 1.27 percent at $53.64 a
barrel as the U.S. dollar       , in which payments for crude
are made, strengthened.
    Oil is one of Canada's major exports.
    The greenback climbed against a basket of major currencies
ahead of minutes of the Fed's latest meeting, while Europe's
political woes kept a bruised euro under pressure.        
    At 9:28 a.m. ET (1428 GMT), the Canadian dollar          was
trading at C$1.3185 to the greenback, or 75.84 U.S. cents,
weaker than Tuesday's close of C$1.3138, or 76.12 U.S. cents.
    The currency's strongest level of the session was C$1.3109,
while it touched its weakest since Feb. 7 at C$1.3210.
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries and German Bunds.
    The two-year            price rose 4 Canadian cents to yield
0.768 percent and the 10-year             climbed 33 Canadian
cents to yield 1.684 percent.
    Canada's inflation report for January is due on Friday, with
economists expecting the annual rate to edge up to 1.6 percent.

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli)

Crews seek source of Saskatchewan oil spill on aboriginal land

By Alastair Sharp | TORONTO

An investigation into an oil spill on an aboriginal reserve in western Canada will include checks of leak-detection measures, Saskatchewan's energy minister said on Tuesday, as crews prepare to excavate the site to confirm the spill's source.

"We need to obviously as part of that investigation make that determination of when exactly the leak did take place and whether the monitoring system that the company employs is adequate enough," Dustin Duncan told reporters in Regina, the provincial capital.

Some 200,000 liters (52,834 gallons) of oil leaked last week onto the Ocean Man First Nation, 140 km (87 miles) southeast of Regina.


Vacuum trucks are on site to remove oil and contaminated soil, with excavation expected to begin on Wednesday.

Authorities were notified of the leak on Friday, when an area resident who had smelled the scent of oil for a week located the spill and alerted the band's chief, who notified Tundra Energy Marketing Ltd.

Tundra has a line adjacent to the spill and is leading cleanup efforts, but has not publicly confirmed its pipeline as the source of the leak.

Crescent Point Energy Corp (CPG.TO), which also has assets in the area, said Tundra notified them on Friday of a "suspected anomaly on a portion of their system".

If the problem persists, Crescent Point may have to divert around 1,000 barrels a day of its crude heading to facilities in neighboring Manitoba, spokesman Trent Stangl said.

Tundra, part of Canadian grain trading and energy conglomerate James Richardson and Sons Ltd, said late on Monday it is cooperating with all levels of government and will ensure "the affected land is restored appropriately."

"There has to be a time frame set that they follow up every week, every month, every season depending on what the weather can cause, and every year, until Ocean Man is satisfied that yes, everything is okay," Chief Connie Big Eagle said.

No residences are close to the spill site but it is near a cemetery which is considered sacred land by the band.

Pipelines are viewed by the oil-rich provinces of Alberta and Saskatchewan as critical lifelines, but draw fierce opposition from environmental and indigenous groups.

"It just raises the issue yet again, that if you are going to build these pipelines, you're going to be placing communities and water and land at risk," said Gretchen Fitzgerald, national program director at the Sierra Club Canada Foundation.



CANADA FX DEBT-C$ weakens as oil dips, greenback rebounds

* Canadian dollar at C$1.3148, or 76.06 U.S. cents * Bond prices higher across the yield curve TORONTO, Jan 16 The Canadian dollar weakened against its U.S. counterpart on Monday, paring some recent gains ahead of a Bank of Canada interest rate decision midweek as oil dipped and the greenback rebounded against a basket of major currencies. The U.S. dollar rose after suffering its worst week since November. It was hit last week by a lack of clarity over what U.S. President-elect Donald Trump, whose inauguration is on Friday, will do once he assumes office. Prices of oil, one of Canada's major exports, slipped amid doubts that large oil producers will reduce production as promised and on expectations that U.S. production would increase again this year. U.S. crude prices were down 0.10 percent at $52.32 a barrel. At 9:23 a.m. ET (1423 GMT), the Canadian dollar was trading at C$1.3148 to the greenback, or 76.06 U.S. cents, weaker than Friday's close of C$1.3126, or 76.18 U.S. cents. The currency's strongest level of the session was C$1.3102, while its weakest was C$1.3163. U.S. markets are closed on Monday for Martin Luther King Jr. Day, which will lower liquidity. Analysts expect the Bank of Canada to leave its policy rate on hold at 0.5 percent at Wednesday's announcement. As recently as October, the central bank said it had considered easing rates as it downgraded its economic outlook. But recent data showed a surge in jobs in December and the first trade surplus in more than two years in November, while a Bank of Canada survey last week pointed to improving business conditions. On Thursday, the loonie had touched a near 3-month high at C$1.3028. Speculators have raised bearish bets on the Canadian dollar. Net short Canadian dollar positions rose to 7,935 contracts as of Jan. 10 from 3,871 a week earlier, data from the Commodity Futures Trading Commission and Reuters calculations showed on Friday. Canadian government bond prices were higher across the yield curve as investors sought shelter in safe haven assets as uncertainty over Britain's departure from the European Union and the policies of Trump curbed appetite for risk. The two-year price rose 0.5 Canadian cent to yield 0.797 percent and the 10-year climbed 20 Canadian cents to yield 1.691 percent.




Canada Rules Out Arctic Oil Drilling Extensions for Exxon and BP

The Canadian government says it won’t grant extensions to exploration licenses for Exxon Mobil Corp., BP Plc and other oil firms as it prepares for consultations over the impact of an Arctic drilling moratorium.

The companies hold leases that expire over the next six years, totaling C$1.9 billion ($1.4 billion) in bids. Prime Minister Justin Trudeau and U.S. President Barack Obama announced new restrictions on Arctic oil development on Dec. 20, with Canada saying existing leases wouldn’t be affected without industry input on a path forward.

In an online background document, however, Trudeau’s government specifically ruled out lease extensions sought by industry before the new restrictions were put in place. Companies had expected that to be a central part of talks.

“Our understanding is they’ll have consultations and conversations with industry, in particular the license holders, with respect to extensions,” said Paul Barnes, Atlantic Canada and Arctic manager for the Canadian Association of Petroleum Producers, the top industry lobby group. “We’re kind of anxious to have further discussions.”

Indigenous and Northern Affairs Minister Carolyn Bennett, who oversees Arctic oil regulation, has declined interview requests since the announcement. Bennett’s spokeswoman, Sabrina Williams, referred questions about extensions to the department.

Free to Ask

When asked specifically, the department didn’t directly address its online statement that extensions won’t be granted -- saying instead companies are free to keep asking for them. “Should stakeholders raise license extension issues during the consultations, the Government of Canada will take their feedback into account to inform next steps,” departmental spokesman Shawn Jackson said in a written statement.

There is no current offshore oil production or drilling in Canada’s Arctic, though exploration there dates back to incentives brought in by Trudeau’s father, former Prime Minister Pierre Trudeau. Five companies hold exploration licenses expiring between 2019 and 2023, all in the section of the Beaufort Sea that lies along the shores of Canada’s Yukon and Northwest Territories. 

The Canadian leaseholders are BP; Imperial Oil Resources Ventures Limited, controlled by Exxon; ConocoPhillips Co.Chevron Canada Ltd.; and Franklin Petroleum Canada Ltd. Two other exploration licenses issued in the 1980s to Talisman Energy Inc., acquired by Repsol SA in 2015, and BP have no expiry dates.

Trudeau’s government has said those companies are eligible to upgrade their licenses in the event of a discovery, but initially referred to consultations when pressed on whether extensions will be allowed. The prime minister has pledged to review the moratorium in five years, when all but Franklin will see their exploration licenses expire.

‘Find a Way’

Of the outstanding exploration licenses, Imperial’s were acquired at the highest cost -- C$1.8 billion in work bid commitments. Imperial said last month it had previously sought extensions for exploration licenses “to ensure future oil and gas activities are conducted in an appropriately paced, safe and environmentally responsible manner.” The company didn’t respond to a request for further comment.

The most recent exploration licenses were acquired at lower costs -- between C$1 million and C$1.3 million each -- by Franklin, as recently as 2014. “We remain in contact with the Ottawa authorities on this and will certainly be involved in the proposed review to find a way forward to explore in the North,” Paul Barrett, a Franklin executive, said in an e-mail.

If companies walk away from bids, the government can call in the value of work permit guarantees, Barrett said, while adding the matter could end up in court if work is blocked. “Extending these licenses will likely be a key part of the review, rather than technical discussions around Arctic drilling,” he said.

In a written statement, BP said it would “work to understand any potential implications to our business.” Conoco and Chevron declined to comment.

Northern Opposition

Environmental groups welcomed the joint move by Obama and Trudeau, and have called for stringent restrictions on existing activity. Alex Speers-Roesch, a Greenpeace campaigner, said developing Arctic oil is at odds with Canada’s emissions reduction pledges.

“By their own logic, the government should go further and pause all Arctic oil and gas projects until they have rigorous tests in place that assess whether these projects make sense in the low-carbon world Canada championed in the Paris climate agreement,” he said in an e-mail.

Trudeau and Obama announced the measure without involving the Northwest Territories government, drawing a complaint from its premier, Bob McLeod. McLeod said the unilateral move will require the federal government to fund other industries in the sparsely populated region, where the cost of living is among the highest in the country.



CANADA FX DEBT-C$ strengthens as oil rises, greenback slides

* Canadian dollar at C$1.3287, or 75.26 U.S. cents * Loonie touches its strongest since Dec. 14 at C$1.3255. * Bond prices higher across the yield curve


The Canadian dollar strengthened to a three-week high against its U.S. counterpart on Thursday as oil prices rose and the greenback lost ground against a basket of major currencies. Some of the biggest gains on record for China's yuan sent currency markets spinning, driving the U.S. dollar broadly lower and threatening to quash one of the central bets of global investors for 2017. Prices of oil, one of Canada's major exports, rose after Saudi Arabia started talks with customers about a reduction in crude sales to support a plan by OPEC to reduce global supply. U.S. crude prices were up 0.71 percent at $53.64 a barrel. At 9:15 a.m. ET (1415 GMT), the Canadian dollar was trading at C$1.3287 to the greenback, or 75.26 U.S. cents, stronger than Wednesday's close of C$1.3308, or 75.14 U.S. cents. The currency's weakest level of the session was C$1.3312, while it touched its strongest since Dec. 14 at C$1.3255. The move follows a 3 percent gain for the currency in 2016, its first annual advance since 2012, as oil rebounded from its February trough. Canadian producer prices rose 0.3 percent in November from October on higher prices for motorized and recreational vehicles and primary non-ferrous metal products, Statistics Canada said. Canadian government bond prices were higher across the yield curve, with the two-year price up 1.5 Canadian cents to yield 0.748 percent and the 10-year rising 5 Canadian cents to yield 1.705 percent. The gap between Canada's 5-year yield and its U.S. equivalent narrowed by 3.3 basis points to -79.6 basis points, as U.S. Treasuries outperformed after data showed the U.S. economy created fewer private-sector jobs in December than market expectations. Canada's trade report for November and employment report for December are due on Friday. (Reporting by Fergal Smith; Editing by Meredith Mazzilli)


As Sun Sets on Canada Energy, Grafton Eyes Renewables

Grafton Asset Management Inc., a firm that has brought foreign investment into Canada’s oil and gas industry, is looking to add alternative energy to its portfolio for the first time as it positions itself for the decline of fossil fuels.

“I’m worried about the future of the industry in general,” Geeta Sankappanavar, president and chief operating officer of the Calgary-based investment firm, said in a phone interview on Tuesday. “It’s going to be a great business for a period of time, but I do look at it as a sun-setting business -- one where we’ll see competition and disruption from outside our industry.” 

Oil and gas companies have had to cut investment and fire workers to weather the worst price crash in a generation. As crude rebounds after the Organization of the Petroleum Exporting Countries and other major exporters pledged to cut output, some producers like Cenovus Energy Inc.are resuming expansion plans. But prices are still half their peak level in mid-2014.

Sankappanavar expects the oil and gas industry’s recovery to be muted compared with previous cycles and is looking at financing more environmentally friendly and renewable power projects across Canada, including natural gas plants and biomass facilities. The company plans to attract capital from global investors to diversify its asset base. A majority of Grafton’s capital comes from the Middle East, Europe and the U.S.

Grafton has about C$1 billion ($750 million) in assets under management, of which C$900 million is focused on direct investments in the Canadian oil and gas sector and the remaining C$100 million is invested through its Grafton Energy Opportunities equity fund. The fund returned 65 percent last year through November, according to preliminary, unaudited figures from the company. That’s more than double the 30 percent gain for the S&P/TSX energy sector index over the same span.

The firm’s equity portfolio includes oilfield services provider Canyon Services Group Inc. and producers Kelt Exploration Ltd. and Seven Generations Energy Ltd. Seven Generations more than doubled last year, while Canyon and Kelt rose 73 percent and 60 percent, respectively.

Canyon fell 0.3 percent to C$7.37 at 11:23 a.m. in Toronto. Kelt gained 4.1 percent, while Seven Generations dropped 2.5 percent.

While a rebound in oil prices is helping producers emerge from the downturn, selling Alberta’s energy sector to the world remains tricky as the high-cost operations struggle to remain competitive, she said. Uncertainty over Alberta’s tax regime and carbon pricing also deter foreign investors, she said.

“In Alberta, I think we’re going to get the rising tide effect from higher oil prices, but we need to figure out a way to differentiate ourselves in order to attract that investment,” Sankappanavar, 42, said.

Oil majors including Royal Dutch Shell Plc and Statoil ASA have been selling Western Canadian properties to focus on more profitable prospects elsewhere.

Firm’s Strategy

Grafton has stayed away from investing in assets that are already producing. Instead, the firm’s strategy is to look for those that look promising for what they hold below ground, even if projects face challenges and would take three to five years to start output.

The company has a partnership with Tourmaline Oil Corp. and owns 25 percent of the producer’s Peace River High project. It also has a joint venture with Bellatrix Exploration Ltd. and holds assets in the Montney, a shale formation straddling Alberta and British Columbia.

“We’re still in the first inning of a nine-inning game,” Sankappanavar said. "I’m positive on the outlook of capital and the industry for the next 12 months, but you take a little bit longer and you start to worry."


Canadian Stocks Slide Most in Two Weeks as Oil Companies Retreat

Canadian stocks fell the most in two weeks, as energy companies are mired in a losing streak with talks among producers continuing ahead of the OPEC summit in Vienna this week.

The S&P/TSX Composite Index fell 0.4 percent to 15,015.36 at 4 p.m. in Toronto, the most since Nov. 11. Trading volume in the Canadian equity benchmark was 11 percent lower than the 30-day average. The index remains up 15 percent in 2016, the top performer among developed markets tracked by Bloomberg.

Energy producers led the index lower, falling 1.4 percent as a group for a third day of losses, the longest losing streak since Nov. 4. Seven of 11 industries in the S&P/TSX were lower. Canadian National Railway Co. and Canadian Pacific Railway Ltd. retreated as industrial stocks also declined.

Medical marijuana producer Canopy Growth Corp. jumped 5.9 percent after agreeing to buy German pharmaceutical distributor MedCann GmbH Pharma and Nutraceuticals. The Canadian government, meanwhile, is preparing to review a task force report on recreational legalization.

Among other moves:

  • Raw-materials producers rose 1.8 percent as industrial metals extended their winning streak. The Bloomberg Industrial Metals sub-index posted its biggest five-day gain since 2011 as zinc touched the highest level in nine years.
  • Teck Resources Ltd., the best-performing stock in the S&P/TSX this year, slipped 0.5 percent. Teck is up almost seven-fold in 2016 on rallies in metallurgical coal and zinc.
  • Encana Corp. dropped 3.9 percent for a third day of losses after John Gerdes at KLR Group cut his rating for the stock to accumulate from buy.



Oil slips as focus shifts from Trump to crude glut, OPEC

Oil prices settled more than 1 percent lower on Thursday as markets recovered from shock over U.S. President-elect Donald Trump's victory and focused on oversupply concerns, as well as whether OPEC will decide later this month to cut production.

Most markets shook off post-election losses and bounced back on Thursday, but oil still faces a glut that has kept prices under pressure for much of the past two years.

The Organization of the Petroleum Exporting Countries (OPEC) meets in Vienna on Nov. 30 for talks on output cuts. It has sought cooperation from non-members, including Russia, but doubts remain over whether they can come to an agreement.

Brent crude settled down 54 cents, or 1.1 percent, at $45.84 a barrel. U.S. West Texas Intermediate crude ended 61 cents, or 1.4 percent, lower at $44.66.

WTI's front-month discount to the second-month, or contango, hit its widest in nearly three months on concerns about domestic oversupply as data shows rising stockpiles, traders said.

The U.S. Energy Information Administration on Wednesday reported a 2.4 million-barrel rise in domestic crude inventories to 485 million barrels last week.

"When the physical markets are weak, that influences people to hedge their cargos, and that results in selling," said Scott Shelton, energy futures broker with ICAP in Durham, North Carolina.

The market was under pressure even as stockpiles at the U.S. delivery hub for crude futures in Cushing, Oklahoma dropped by 663,916 barrels for the week to Nov. 8, according to traders, citing energy monitoring service Genscape.

The International Energy Agency (IEA) said the global market will remain in surplus unless OPEC can reach an agreement at its Nov. 30 meeting.

"If the supply surplus persists in 2017, there must be some risk of prices falling back," the IEA said in its monthly report.

Prices will likely rebound, at least temporarily, in the coming days and may go above $50 a barrel as traders cling to the hope of an OPEC deal, said Fawad Razaqzada, analyst at Forex.com.

"Although there is so much doubt about the prospects of a production cut or freeze deal between the OPEC and Russia, an agreement is still possible," he said.

Russian Energy Minister Alexander Novak said he saw higher chances of reaching a deal than before, and that global crude output could be frozen at November levels if an agreement is reached.

(Additional reporting by Christopher Johnson in London and Henning Gloystein in Singapore; Editing by Marguerita Choy and Will Dunham)



Oil mixed as election seen swinging to Clinton while OPEC doubts weigh

Oil prices were mixed on Monday, supported by easing concerns over the economy after news that U.S. presidential candidate Hillary Clinton will not face charges over her emails, but prices were pressured by a rallying dollar and doubts over OPEC's planned production cuts.

U.S. crude futures were also supported by a weekly drop of 442,077 barrels of oil at the U.S. delivery hub in Cushing, Oklahoma, according to data to the week ending Nov. 4 from energy monitoring service Genscape, cited by traders.

U.S. West Texas Intermediate (WTI) crude CLc1 traded at $44.21 per barrel at 10:56 a.m. (1556 GMT), up 14 cents, or 0.3 percent.

Brent crude LCOc1 was down 20 cents, or 0.09 percent, at $45.49 a barrel.

"There's a little bit less of a concern about the economy falling apart," said Phil Flynn, analyst at Price Futures Group in Chicago.

The Federal Bureau of Investigation said it would not press charges against Clinton over her using a private email server. That indicated worse prospects for Republican candidate Donald Trump, whose stance on foreign policy, trade and immigration have unnerved the market.

U.S. stocks [.SPX] soared on Monday, a day before the election, while the dollar strengthened on news of Clinton's improved prospects, making greenback-denominated crude more expensive for holders of other currencies.[.N] {USD/]

OPEC Secretary-General Mohammed Barkindo reiterated the Organization of the Petroleum Exporting Countries' commitment to a deal to cut output made in Algiers late September, which sought to boost prices after two years of oversupply.

But many analysts doubt OPEC's ability to coordinate a cut sufficient to balance the market.

"Market belief that OPEC can reach a credible deal has collapsed and prices are now $8 a barrel off the post-Algiers highs," David Hufton, managing director of PVM Oil Associates, said in a note.

He cited record OPEC production in October, infighting between Iran and Saudi Arabia, as well as calls from Iraq for its own exemption from any cut.

Oil futures posted their biggest weekly percentage decline since January last week with Brent falling as low as $45.08, its weakest since Aug. 11, and WTI hitting $43.57, its lowest since Sept. 20.

(Additional reporting by Libby George in LONDON and Henning Gloystein in SINGAPORE; Editing by Marguerita Choy and Dale Hudson)



CANADA FX DEBT-C$ strengthens as oil rises, Wall Street pares losses

(New throughout, updates prices and market activity, adds
analyst quotes and details on finance minister's comments)
    * Canadian dollar ends at C$1.3205, or 75.73 U.S. cents
    * Loonie touches its weakest since Friday at C$1.3307
    * Bond prices higher across the yield curve

    By Fergal Smith
    TORONTO, Oct 13 The Canadian dollar strengthened
against its U.S. counterpart on Thursday as oil prices rose and
Wall Street pared some losses, spurred by weak Chinese trade
    A sharp decline in China's exports revived concerns about
the health of the world's second-biggest economy. 
    Commodity currencies such as the Canadian dollar were sold
on the weak Chinese data. But investors who got short the
currency were forced to cover their positions as oil and U.S.
stocks rebounded from session lows, said Patric Booth, head of
trading at Velocity Trade.
    The U.S. dollar tumbled from a seven-month high as
Chinese concerns spooked a market that is expecting an interest
rate increase from the Federal Reserve by the end of the year.
    U.S. crude oil futures settled up 26 cents at $50.44
a barrel after a U.S. government report showing hefty draws in
diesel and gasoline offset the first crude inventory build in
six weeks. 
    Oil is one of Canada's major exports.
    Still, the Canadian dollar's normally tight link with the
price of oil, which broke down in September, likely will not
reassert itself until after the U.S. election and a potential
interest rate hike by the Federal Reserve, currency strategists
    "The fact that crude has gone up above $50 and the Canadian
dollar hasn't really benefited one bit since the OPEC
announcement ... to me leaves Canada (dollar) vulnerable if oil
sells off," Booth said. 
    The Canadian dollar closed at C$1.3205 to the
greenback, or 75.73 U.S. cents, stronger than Wednesday's close
of C$1.3259, or 75.42 U.S. cents. Its close was just above the  
  200-day moving average at C$1.3196, according to Reuters data.
    The currency's strongest level of the session was C$1.3185,
while it touched its weakest since Friday at C$1.3307, just shy
of the more-than six-month low set on Friday at C$1.3315.
    Canada's government will watch the country's housing market
but has no imminent plans for further cooling measures, Finance
Minister Bill Morneau said on Thursday, as fresh data showed
prices were still on the rise. 
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries. The two-year 
firmed 0.7 of a Canadian cent to yield 0.599 percent and the
benchmark 10-year climbed 13 Canadian cents to yield
1.182 percent.
    The 10-year spread versus Treasuries narrowed 1.7 basis
points to -56.4 basis points as Treasuries outperformed on the
pick-up in risk aversion.

 (Reporting by Fergal Smith; Editing by Nick Zieminski and David


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