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Energy Summary for March 26, 2020

2020-03-26 19:34 ET - Market Summary

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by Stockwatch Business Reporter

West Texas Intermediate crude for May delivery lost $1.89 to $22.60 on the New York Merc, while Brent for May had a noticeably softer fall, losing $1.05 to $26.34 (all figures in this para U.S.). The difference reflects the higher level of support that the U.S. benchmark was previously enjoying over its international counterpart. Traders had been expecting the U.S. government to follow through on plans to buy domestic crude oil for the SPR (strategic petroleum reserve). They were caught off guard today when the U.S. government abruptly scrapped this idea. Here in Canada, Western Canadian Select traded at a discount of $16.55 to WTI, down from a discount of $15.65. Natural gas for April lost two cents to $1.64. The TSX energy index lost a fraction to close at 51.34.

After the SPR blow, not even the unanimous U.S. Senate passage of a $2-trillion (U.S.) stimulus bill could soothe investors' frayed nerves, particularly in light of bearish new comments from the International Energy Agency (IEA). The head of the IEA is estimating that global oil demand could fall by as much as 20 million barrels a day -- a 20-per-cent drop -- as a result of the COVID-19 pandemic. That is equal to two Saudi Arabias worth of production with no one to buy it. The mood also remained gloomy in the Canadian oil patch, despite glimmers of hope for a federal relief package designed specially for energy companies. Finance Minister Bill Morneau said during a Senate hearing yesterday that details could arrive in "hours, potentially days."

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