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Canada boosts U.S. natgas exports, drills more as global prices surge

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Demand has jumped for relatively cheap Canadian natural gas, driving exports to the United States to three-year highs and prompting producers in Canada to boost capital spending and drilling activity.

Global natural gas prices have hit multi-year highs as world economies recover from last year’s slowdown during the pandemic. Now, natural gas stockpiles in Europe are dangerously low and demand in Asia has been insatiable, so utilities around the world are competing for liquefied natural gas (LNG) exports.

Canada‘s gas is remote, and prices at the AECO hub in Alberta are among the cheapest in North America, with production far from major U.S. demand centers and LNG export terminals in the U.S. Gulf Coast, some 2,500 miles (4,023 km) away. Canada has no LNG export terminals.

Still, at around C$5 ($4.12) per million British thermal units (mmBtu), AECO prices are well above their 2021 year-to-date average of C$3.38 ($2.73), and some of Canada‘s largest gas producers including Tourmaline Oil Corp are seeking to capitalize.

“A number of producers are accelerating capital into Q4 (fourth quarter) to add production volumes into the higher-priced winter market,” said Matt Murphy, an analyst at Tudor, Pickering, Holt & Co (TPH) in Calgary.

Gas receipts into TC Energy’s NGTL pipeline system hit an all-time high of 12.75 billion cubic feet per day (bcfd) in mid-October, according to TPH records dating from 2013. The NGTL system is the main artery shipping western Canadian gas to market, and can be used as a proxy for output from the region.

TPH is forecasting further gas receipt growth to 12.9 bcfd in December, with new highs in 2022.

Data provider Refinitiv said Canadian exports to the United States averaged 8.3 bcfd year-to-date, the highest over that time period since 2018. In 2020, Canadian exports hit their lowest level since 1993 because of the pandemic, according to U.S. Energy Information Administration data.

The increase in drilling activity in Canada contrasts with a more cautious approach among U.S. gas producers, who are still being careful with their capital after the pandemic decimated demand in 2020 and left the industry on its knees.

The Canadian gas rig count is currently 70, up 75% from this time last year, while U.S. gas rigs are up about 32% to 98 over the same period, according to energy services firm Baker Hughes Co.

Tourmaline, Canada‘s largest gas producer, is accelerating drilling in the second half and bringing capital spending originally earmarked for 2022 into this year, according to a company presentation in September.

“The company will monitor natural gas supply/demand balances and schedule new production startups appropriately through the course of winter and the balance of 2022,” Tourmaline said.

The company expects to produce on average 500,000-510,000 barrels of oil equivalent next year, up from 440,000-445,000 in 2021.

Other major Canadian gas producers increasing activity include Canadian Natural Resources Ltd and ARC Resources, industry analysts said. ARC declined to comment and CNRL did not respond to a request for comment.

However, a shortage of skilled crews to operate drilling rigs in Canada could limit how much gas output climbs, and some producers remain cautious that increased supply may rein in prices.

“How do we do more even if we wanted to do more? We’re at a limit on the people that we have,” said Darren Gee, Chief Executive of Peyto Exploration and Development Corp.

($1 = 1.2363 Canadian dollars)

 

(Additional reporting by Rod Nickel in Winnipeg; Editing by David Gregorio)

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Toronto-Dominion Profit Tops Estimates on Canadian Recovery – Yahoo Finance

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(Bloomberg) — Toronto-Dominion Bank’s Canadian operation is getting a boost from a rebound in consumer spending and the continued strength of the country’s housing market.

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Profit in the Canadian retail business rose 19% to C$2.14 billion ($1.7 billion) in the fiscal fourth quarter, the Toronto-based bank said Thursday in a statement. Overall profit topped analysts’ estimates.

Toronto-Dominion has seen its balances of mortgages and home-equity lines of credit swell throughout the pandemic as Canadian home prices soared and sales volumes remained strong. The unit has posted two straight quarter-over-quarter gains in credit-card balances as the country’s consumers start to ramp up spending.

“The recovery is under way, and we’re especially pleased with that because we are a strong consumer, retail bank,” Chief Financial Officer Kelvin Tran said in an interview. “We’re purpose-built for this recovery.”

The bank — freed last month from industrywide restrictions on boosting its dividend and buying back stock — also raised its quarterly dividend 13% to 89 cents a share and said it would repurchase 50 million shares, or 2.7% of shares outstanding, which would cost roughly C$4.6 billion at the current price.

Toronto-Dominion rose 3.1% to C$94.82 at 9:45 a.m. in Toronto. The shares have risen 32% this year, compared with a 27% gain for the S&P/TSX Commercial Banks Index.

Net income declined 26% to C$3.78 billion, or C$2.04 a share, in the quarter ended Oct. 31. Excluding some items, profit was C$2.09 a share. Analysts estimated C$1.96, on average.

The lender’s net interest margin — the difference between what it earns from loans and what it spends on deposits — widened to 1.58% in the fourth quarter from 1.56% in the third. That’s a contrast to rivals including Royal Bank of Canada and National Bank of Canada, which reported narrowing spreads for last quarter. For Toronto-Dominion, the margin was helped by higher wholesale lending revenue and better investment revenue in the U.S. bank, Tran said.

Toronto-Dominion released C$123 million in provisions for credit losses. Analysts estimated the bank would set aside C$161 million.

The company’s U.S. retail operations haven’t gained the same momentum as the Canadian division. While the full personal loans category increased from the third quarter, business loans fell 5.9%. In Canada, business loans have gained sequentially for four straight quarters. Total profit for the U.S. unit rose 66% to $1.09 billion in the fourth quarter, helped by a recovery of credit provisions.

“In the U.S. there’s more excess liquidity due to various government programs,” Tran said. “So our customers don’t have a need at this point in time to get more loans from banks.”

(Updates shares in sixth paragraph.)

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OPEC+ sticks with current oil production plan, despite Omicron – Aljazeera.com

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OPEC+ is sticking with its current plan to adjust crude output by an additional 400,000 barrels a day in January.

OPEC+ is sticking with its plan to keep slowing raising oil output, despite the threat the new Omicron variant of the coronavirus could pose to global crude demand.

OPEC+ – a grouping of the Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia, and its allies led by Russia – made the decision at the conclusion of its meeting on Thursday to stick with its current plan to adjust crude output by an additional 400,000 barrels a day in January.

The group has been incrementally opening its taps since August as it continues to unwind the deep production cuts it agreed to back in 2020, when oil prices crashed in the opening months of the pandemic.

Thursday’s decision to hold the line on its current output plan comes at a time of heightened concerns in global oil markets.

Benchmark oil prices have fallen more than $12 since the World Health Organization declared Omicron a “variant of concern” last week, triggering fresh travel restrictions – which could dent crude demand – as well as fuelling concerns over how effective current COVID-19 vaccines may be against the new strain.

Oil prices kept slipping following the news of Thursday’s OPEC+ decision. At 10:26am ET (15:26 GMT) in New York trading, global benchmark Brent crude was down 60 cents to $68.27 a barrel, while United States benchmark West Texas Intermediate (WTI) crude was down 66 cents at $64.91 cents a barrel, according to Bloomberg data.

Last Thursday, Brent crude was trading upward of $82 a barrel, while WTI was north of $77 a barrel.

Global oil markets have been whipsawed in recent weeks. An energy crunch that swept the globe in October saw prices rise sharply, prompting calls from US President Joe Biden for OPEC and its allies to boost output and help cool the market.

OPEC+ resisted those calls, leading the US and other nations to tap their strategic oil reserves to help alleviate global price pressures.

But the unpredictable path of the pandemic has flexed its muscle over global energy markets once again with the emergence of the Omicron variant.

“The Omicron variant has sobered up markets during the last few days, halting the oil demand recovery enthusiasm and sending traders scrambling to limit risk in their portfolios,” analysts at Rystad Energy wrote in a note to clients on Thursday.

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Oil Prices Bounce Back Despite The OPEC Decision – OilPrice.com

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Oil Prices Bounce Back Despite The OPEC+ Decision | OilPrice.com


Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Oil prices rose on Thursday after OPEC+ decided to keep its oil production policy unchanged and add another 400,000 bpd on the market in January.

As of 10:14 a.m. EST, post OPEC+ meet, WTI Crude was up 1.46% at $66.53 and Brent Crude had increased 1.35% at $69.80. Both benchmarks erased the losses of 3% right after first news reports suggested the monthly increase was on for January.

OPEC+ is sticking to its production plan to add 400,000 barrels per day (bpd) to its production in January, OPEC said in a statement on Thursday, noting that the meeting remains in session.  

The group “agree that the meeting shall remain in session pending further developments of the pandemic and continue to monitor the market closely and make immediate adjustments if required,” OPEC said.

The next regularly scheduled meeting of OPEC+ is set for January 4, 2022.

So, the group is now set to add oil on the market in January, although speculation was high in recent days that OPEC+ could opt for a pause in the monthly increases because of the still high uncertainty over the Omicron COVID variant, the SPR releases led by the United States, and the expected worse-than-thought oil surplus early next year.

The leaders of the group, Saudi Arabia and Russia, had already signaled earlier this week that OPEC+ should not jump the gun and freeze the monthly additions to supply because of the Omicron variant, which has spooked the oil market. With still little information on the new variant and whether it escapes vaccine protection, the alliance looks ready to take further action, if necessary, but it is showing it is not over-reacting to Omicron as many analysts said the market has done.

Initial reactions to the rollover of the production policy suggest that OPEC+ could also believe that global demand will remain resilient during the winter season, and sends a message to the market present in almost every press release: stability.

By Tsvetana Paraskova for Oilprice.com

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