Cenovus Energy Inc T.CVE

TD Notes

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As for the price drop, the entire sector was hammered yesterday. GLTA

The Crude Facts

Weekly Oil Charts

TD Investment Conclusion

In the following charts, we summarize the key oil data-points for the global crude oil supply/demand outlook. We highlight the following weekly trends:

1) Neutral inventory report: The EIA reported a higher-than-expected crude inventory draw vs. consensus, but slightly below yesterday's API data. The build in gasoline inventories was above consensus (but in-line with the API), while the larger-than-expected distillate draw (vs. consensus and API) was a result of a strong increase in demand (up 27% w/w, Exhibit 4). U.S jet fuel demand currently sits ~24% below the five-year average, but as global vaccination rates accelerate, it should slowly trend back to normalized levels, in our view.

2) IEA expects oil demand to return to pre-pandemic levels by YE2022: In its June 2021 Oil Market Report, the IEA indicated that it expects global oil demand to rise by 5.4 mmbbl/d in 2021 and 3.1 mmbbl/d in 2022, reaching a level of 100.6 mmbbl/d. It also expects global supply to accelerate in 2022 with the onus on OPEC + to "keep the taps open" to balance the market.

3) Robust pricing environment driving low total payouts and strong balance sheets: With spot WTI prices at ~US$72/bbl and 2021E at ~US$66/bbl, reinvestment rates across the sector remain the lowest in years while balance sheets have dramatically strengthened over the last year. This is a good set-up for the Canadian integrated producers in particular as they rank best-in-class globally on these measures.