TSX INDEXES for Energy, Real Estate, Financial Services, Gold and the Bank of Canada Commodities in $CAD. See also the WTI vs WCS Crude Oil Price Spread below.
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In June 2019 gold bullion prices after building a 6 year base has broken out to the upside as reflected in the TSX Gold index which is heading towards the 2016 high.
The Canadian commodities index (CCI red plot line) is following the seasonal Crude Oil price contraction. The energy sector downtrend (black plot line) since the manic high of July 2008 continues to stair step down.
CPI (one month lag - chart here) is back above the Bank of Canada target of 2% inflation with a print of 2.4%. CPI has had a 2% or greater handle in 12 out of the last 16 prints but after 10.3 years of ZIRP and NIRP total CPI is still in a long term downtrend.
The up-trending USD/CAD on the monthly chart since the beginning of February 2018 will continue to increase import costs into Canada.
In June 2019 gold bullion prices after building a 6 year base has broken out to the upside as reflected in the TSX Gold index which is heading towards the 2016 high.
The Canadian commodities index (CCI red plot line) is following the seasonal Crude Oil price contraction. The energy sector downtrend (black plot line) since the manic high of July 2008 continues to stair step down.
CPI (one month lag - chart here) is back above the Bank of Canada target of 2% inflation with a print of 2.4%. CPI has had a 2% or greater handle in 12 out of the last 16 prints but after 10.3 years of ZIRP and NIRP total CPI is still in a long term downtrend.
The up-trending USD/CAD on the monthly chart since the beginning of February 2018 will continue to increase import costs into Canada.
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In Calgary strata housing prices are labouring under the new Energy Sector 2.0 as the oil majors head for blacker fields. Big money is fleeing Canada and has been for 20 years, and on the street, Calgary buyers are bidding strata prices lower while their earnings remain the highest in the country. |
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NOTE: the CRB chart to the left shows that global commodities measured in USD plunged from 2008 through 2018 and continues to trend in the bottom of the range.
This reflects the global slowdown in demand producing export deflation for Canadians while import inflation with the rising USD/CAD adds to our consumption costs. The Canadian energy sector excitement at the end of FY 2016 had been muted by a weakening CAD and from all the trumpeting below the border about energy independence and tariff threats. |
Canadian drilling fleet has shrunk from nearly 900 rigs in 2014 to 621 now. |
WTI vs WCS Crude Oil Prices
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Oil is slippery, CMHC is worried, and so is the Department of Finance Canada (DEC 2016). The oil majors are moving out of Alberta.
Major European Banks Are Backing Away From The Oilsands.
The decision by Europe's largest bank, HSBC, to halt funding for new projects in the oilsands has some wondering if other financial institutions, including U.S. banks and pension funds, will eventually follow suit — and what the impact that might have on Canada's energy sector. HSBC last Friday became the latest European bank to announce that it would no longer finance new greenfield oilsands, coal power plant and arctic drilling projects. It follows BNP Paribas and ING, both of which made similar announcements in the past year. HuffPost April 28, 2018.
A massive number of oil and gas wells, facilities and pipeline segments stand to be added to the already bulging files of the Alberta Orphan Well Association in the wake of the likely failure of Sequoia Resources Corp. Calgary Herald March 8, 2018.
Over the past three years Canada, and specifically Alberta, have seen an unprecedented exit of capital. This has been caused by several factors. There are three reasons for this: higher operating costs, limited access to markets for their product and an unfriendly political climate. BOEreport.com March 30, 2017.
OCT 2017, Alberta Energy Regulator listed almost 4,000 orphaned properties in Alberta
MAR 2017, Conoco Phillips divests majority of Alberta assets for $17.7 billion
MAR 2017, Marathon divests oil assets to CNRL for $2.5 billion
MAR 2017, Shell divests oilsands assets to CNRL for $7.25 billion
DEC of 2016, Shell sells Montney and Deep Basin assets to Tourmaline for $1.4 billion
DEC 2016, Statoil sold its Thermal Oil assets to Athabasca Oil Corp for $582 million
OCT of 2016, Koch Oil Sands issues letter to AER requesting canellation of SAGD project
JUN 2016 Chevron announced it was looking to unload more assets in Western Canada
APR 2016, Murphy Oil sold its 5% interest in Syncrude to Suncor for $937 million
NOV 2015 ConocoPhillips sold a massive land package
FEB 2015, Shell withdrew an application for a new oilsands mine
DEC 2014, EOG Resources divested the majority of its Canadian assets
SEP 2014 Statoil put an oilsands project on hold for 3 years as it grappled with rising costs
MAR 2014, Apache sold a large portion of their Western Canada assets for $374 million
FEB 2014 Devon Energy sold $3.125 billion of assets to CNRL
In 2007 financial fears and energy anxieties had real estate appraisers dusting off their calculators and adding the income approach and replacement calculations back onto their comp-heavy arguments.
Comparative analysis becomes moot in a no-bid-thin-bid market and gives way to fundamental and financial analysis when looking at physical assets.
