Energy Summary for Oct. 3, 2022
2022-10-03 19:59 ET - Market Summary
by Stockwatch Business Reporter
West Texas Intermediate crude for November delivery added $4.14 to $83.63 on the New York Merc, while Brent for December added $3.72 to $88.86 (all figures in this para U.S.). Western Canadian Select traded at a discount of $23.70 to WTI, down from a discount of $22.00. Natural gas for November lost 30 cents to $6.47. The TSX energy index added 12.45 points to close at 227.74.
Oil prices kicked off the quarter with a jump, amid rumours that OPEC+ is considering a sizable production cut at its meeting this Wednesday. Reuters and others reported over the weekend that the group is mulling a cut of one million barrels a day or perhaps even more. This would be the largest cut since the start of the pandemic in early 2020.
Oil bulls liked the rumours. In a research note entitled "OPEC takes on the Fed," the analysts at Goldman Sachs suggested that a cut could help reverse the "collapse in investor participation ... [and] claw back investors who have turned to U.S.-dollar cash allocation following the aggressive Fed [interest rate] hikes." While slashing output may seem counterintuitive given historically tight oil supplies, the tightness has not stopped oil prices from sliding 40 per cent since June, pointed out the analysts. They blamed recession fears. A production cut from OPEC would "reinforce our bullish price view while help[ing] limit the downside ... should economic growth disappoint."
Within the sector, one of today's big energy headlines came from pipeline giant Enbridge Inc. (ENB), up $1.27 to $52.49 on 7.01 million shares. It announced this morning that president and chief executive officer Al Monaco is retiring on Jan. 1. He has been with Enbridge for 27 years, including 10 years in the top job.
They have been a busy 10 years. Under Mr. Monaco's tenure, Enbridge expanded into the largest energy infrastructure company in North America, notably through its $28-billion (U.S.) takeover of Spectra Energy in 2017. Yet the decade has not brought entirely smooth sailing, as exemplified by the long, slow death of the proposed Northern Gateway pipeline (killed by Ottawa in 2016) and the current legal battle over Line 5 (under attack by the governor of Michigan since 2020).
Mr. Monaco's successor as president and CEO will be Greg Ebel, Enbridge's current chairman. Mr. Ebel joined Enbridge in 2017 as part of the takeover of Spectra, where he had worked since 2007, including as president, CEO and chairman since 2009. Prior to that, he worked for Duke Energy and Westcoast Energy. He is 57 years old, to Mr. Monaco's 62. Mr. Monaco will stay on as an adviser until March.