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Energy Summary for April 30, 2020

2020-04-30 20:22 ET - Market Summary

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by Stockwatch Business Reporter

West Texas Intermediate crude for June delivery added $3.78 to $18.84 on the New York Merc, while Brent for June added $2.73 to $25.27 (all figures in this para U.S.). Western Canadian Select traded at a discount of $7.50 to WTI, up from a discount of $8.00. Natural gas for June added eight cents to $1.95. The TSX energy index lost 1.80 points to close at 77.19.

In the sharpest illustration yet of the havoc that the COVID-19 pandemic is wreaking upon the energy sector, Royal Dutch Shell has announced that it is cutting its dividend for the first time since the Second World War. It announced with its first quarter financials this morning that it will reduce its quarterly dividend by two-thirds to 16 U.S. cents. This is a significant blow to Shell, which had long taken pride in its pristine dividend record, even resisting a cut during the deep downturns of the 1980s. The 2020s are simply a different beast altogether.

Shell thus becomes the first of the five supermajors to cut its dividend, leaving investors to ponder which of Exxon, BP, Chevron or Total might be next. The Shell announcement has "thrown down the gauntlet" to these companies, opined Wood Mackenzie analyst Tom Ellacot, noting that the four of them are currently set to pay out $41-billion (U.S.) worth of dividends this year. BP and Exxon have already said they will maintain their first quarter dividends. Total and Chevron have yet to release their first quarter financials.

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