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by Stockwatch Business Reporter
West Texas Intermediate crude for August delivery lost 52 cents to $46.02 on the New York Merc, while Brent for September lost 49 cents to $48.42 (all figures in this para U.S.). Western Canadian Select traded at a discount of $9.30 to WTI ($39.12), up from a discount of $9.75. Natural gas for August added four cents to $3.02. The TSX energy index lost a fraction to close at 169.57.
Quarterly reporting season in the energy sector will kick off this week, with EnCana Corp. (ECA: $11.86) and Husky Energy Inc. (HSE: $14.06) scheduled to release their second quarter financials on Friday. Observers are torn as to what to expect from these and other companies as they release their financials. "To me, it's almost impossible for an E&P [exploration and production] company to not cut the budget," Dan Tsubouchi, chief market strategist of Stream Asset Financial Management, told The Globe and Mail this morning. He cited a lack of hedge protection and the recent oil price drop into the mid- to low $40 (U.S.) range. (Most producers had based their 2017 budgets on oil price assumptions of $50 (U.S.) to $55 (U.S.).) The analysts at CIBC, on the other hand, wrote in a research note on Friday that they see no signs of imminent spending cuts. "The market is still incredibly focused on growth," CIBC analyst Jon Morrison told the Calgary Herald. Around 3,000 wells have been completed in Western Canada so far in 2017, up from closer to 1,800 this time last year. The number of issued well licences has more than doubled to around 4,600. Mr. Morrison reckoned that, if oil prices remain low, the earliest signs of spending cuts among producers will come in the fall.
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