OPEC is keeping this market in a deficit which supports a higher price: TD's Bart Melek
West Texas Intermediate is into another day of gains, climbing back above US$65 per barrel as optimism about the demand outlook rides high even as COVID ravages India. The payoff from crude’s rally is plainly evident in the latest results from Suncor Energy, which swung to a profit and saw its funds from operations more than double to $2.1 billion in the first quarter as the oil sands giant benefited from a vastly improved operating environment compared to a year earlier during the onset of COVID. Of note: Suncor reduced its debt burden by $1.1 billion in the latest quarter and says it oil sands per-barrel operating costs tumbled 20 per cent.
CONOCO EXITING CENOVUS STAKE
A little more than four years after ConocoPhillips struck its $17.7-billion asset sale to Cenovus, the U.S. oil giant is preparing to cash out. In its earnings release this morning, Conoco said it plans to begin paring its 10 per cent stake in Cenovus during this quarter and is aiming to divest by the fourth quarter of next year. Cenovus shares have more than doubled over the last year, but are trading well below where they stood when Conoco and Cenovus announced their deal.
BRIDGING FINANCE FALLOUT
Another borrower associated with the fund manager and lender that was rushed into receivership amid a litany of accusations is speaking out. In a brief statement, Alaska-Alberta Railway Development Corporation said it will fully cooperate in the investigation of Bridging Finance after its name surfaced in the OSC’s sworn affidavit as a result of $160 million in loans starting in 2015. AARDC’s chairman and founder is Sean McCoshen, who the OSC claims is responsible for $19.5 million in transfers to the personal chequing account of BFI’s CEO. Reminder that none of the OSC’s allegations have been proven or tested. We’ll keep peeling back the layers on the story and will explore how/why BFI carved a niche for itself in Indigenous Finance and where this controversy leaves its clients.
RETAIL OUTLOOK WITH TURNAROUND ARTIST
We’re looking forward to catching up with Hubert Joly this morning. He’s the former Best Buy CEO whose deft touch with the in-store experience won praise on Wall Street and helped drive a more than tripling in Best Buy’s stock price in an era when so many brick-and-mortar retailers succumbed to Amazon. So who does he sees as the industry’s winners and losers these days? We’ll find out at 8:20 a.m.
OTHER NOTABLE STORIES
- Nutrien raised its full-year profit forecast after smashing first-quarter profit expectations as healthy crop prices drive demand for the fertilizer giant’s products. We’re looking forward to speaking with Nutrien’s newly-minted CEO, Mayo Schmidt, at 11:20 a.m.
- Domtar shares have been rallying on the back of our Bloomberg partners’ report that the paper company is in talks to be taken private by B.C.-based Paper Excellence. In a short statement this morning, Domtar confirmed that it’s been in talks with Paper Excellence, while warning there’s no guarantee the two sides will reach a deal.
- COVID is a prominent theme in a couple of big U.S. earnings stories this morning. CVS Health raised its full-year forecast after beating first-quarter profit and sales estimates. The pharmacy chain credited COVID diagnostic tests and vaccinations as driving revenue growth in its Retail/LTC segment. Pfizer also raised its full-year profit outlook thanks to the impact of its COVID vaccine.
- Shares of Ballard Power System collapsed in pre-market trading after the high-profile fuel cell maker reported a 26 per cent plunge in first-quarter revenue and warned of "increased and accelerated investment ahead of market tipping points."
- The federal government is giving the green light to TC Energy's $632-million Nova Gas Transmission north corridor expansion project, while attaching 37 conditions to its approval. In a release this morning, the government pointed to the project's "significant importance" to Alberta workers.
- Notable data: Canadian trade balance, Canadian building permits, U.S. trade balance, U.S. factory orders
- Notable earnings: RioCan REIT, Thomson Reuters, Brookfield Renewable Partners, Stelco Holdings, B2Gold, Kinaxis, Bausch Health, Pfizer, ConocoPhillips, Lyft, Under Armour, CVS Health
- 1:30 p.m. ET: CMHC conference call to discuss 2020 annual report