Dec 3, 2018
The Daily Chase: Notley orders oil production cut; Trump, Xi reach trade truce
By Noah Zivitz
Alberta Premier Rachel Notley has taken matters into her own hands, announcing last night she will force the province’s oil producers to curb production by 325,000 barrels per day, equivalent to 8.7 per cent of total output. She says the move is expected to trim the differential against West Texas Intermediate by $4 per barrel and boost government coffers by $1.1 billion. And in a nod to the undercurrent of tension, the government acknowledged in an FAQ handout there’s “no consensus among industry.” Today, we’ll gather reaction from across the industry and get expert opinion on whether the government’s intervention will achieve its intended goal.
Haven’t seen a fresh quote on Western Canada Select so far this morning, but WTI has been up as much 5.7 per cent -- no doubt benefiting from Russia President Vladimir Putin’s announcement on Saturday that he agreed with Saudi Crown Prince Mohammed bin Salman to extend their coordinated production cuts.
STOCKS SURGE ON TRUMP-XI STANDSTILL
Most major European indices are up ~two per cent and futures are pointing to a surge at the start of trading in New York after the Xi-Trump dinner in Buenos Aires yielded a standstill agreement, with the American president agreeing to hold off on jacking up tariffs on Jan. 1 pending a 90-day negotiation period. According to the White House, China also agreed to buy a “very substantial” amount of U.S. industrial, energy and agricultural products. And late last night, Trump said in a tweet China will “reduce and remove” tariffs on U.S. auto imports.
TRUMP READY TO PULL PLUG ON NAFTA
In what looks like a tactic to heap extra pressure on U.S. lawmakers to approve the new North American trade deal, Trump says he’ll formally terminate NAFTA “shortly.” (see full remarks here)
OTHER NOTABLE STORIES
-Shares of Aphria plummeted in pre-market trading in New York amid an extremely critical report by a short seller. Aphria later said in a statement the claims are “false and defamatory” and that it’s reviewing its legal options.
-International Shareholder Services has reportedly recommended investors vote to elect just two of Paulson & Co.’s nominees to Detour Gold’s board
-West Fraser Timber announced late Friday it will enact temporary production cuts at four of its B.C. mills during the holidays, citing high log costs and supply constraints.
-The Globe and Mail has reported the province of Ontario is dueling with Hydro One’s independent directors over who the company’s new permanent CEO should be.
NOTABLE RELEASES/EVENTS
-Notable data: ISM U.S. manufacturing index
-Automakers report monthly sales
-National Energy Board holds Trans Mountain expansion hearing in Nanaimo, B.C. (to Dec. 6)
Every morning BNN Bloomberg's Managing Editor Noah Zivitz writes a ‘chase note’ to BNN Bloomberg's editorial staff listing the stories and events that will be in the spotlight that day. Have it delivered to your inbox before the trading day begins by heading to www.bnnbloomberg.ca/subscribe.
