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Energy Summary for April 2, 2024

2024-04-02 19:26 ET - Market Summary

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by Stockwatch Business Reporter

West Texas Intermediate crude for May delivery added $1.44 to $85.15 on the New York Merc, while Brent for June added $1.50 to $88.92 (all figures in this para U.S.). Western Canadian Select traded at a discount of $16.20 to WTI, down from a discount of $15.30. Natural gas for May added two cents to $1.86. The TSX energy index added 3.38 points to close at 291.87.

Construction of the long-awaited Trans Mountain pipeline expansion is heading for completion at the end of April, according to a new regulatory filing by the pipeline's eponymous builder. The filing informs the Canadian Energy Regulator that Spread 5-B, the final segment of the $34-billion project, will finish construction and testing at the end of the month. This follows an earlier filing indicating that the pipeline will be in service later this quarter.

The news will send up a cheer among Canadian oil producers, which have been waiting for the pipeline to increase export capacity and reduce pressure on domestic oil prices. In a research note yesterday, the analysts at RBC Capital called Trans Mountain a "game-changer," predicting that the discount between Canadian and U.S. crude prices -- typically around $15 (U.S.) to $25 (U.S.) a barrel, but no stranger to wider blowouts, including a painful $50 (U.S.) in 2018 -- will shrink to just $9.50 (U.S.) in the third quarter. This could create a "rerating scenario" for oil sands producers. In particular, the analysts like Canadian Natural Resources Ltd. (CNQ: $106.11), Suncor Energy Inc. (SU: $51.54), Cenovus Energy Inc. (CVE: $27.76), Imperial Oil Ltd. (IMO: $96.43) and MEG Energy Corp. (MEG: $32.10), for which they see "potential upside" of anywhere from 14 to 45 per cent.

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