Canada energy stocks fall in oil-price tailspin
CALGARY, Alberta, Nov 15 (Reuters) - Canadian energy stocks
skidded 7.5 percent on Thursday as oil prices fell to two-year
lows in the aftermath of OPEC's decision to delay output cuts
until non-cartel members curb production as well.
The dramatic drop in the Toronto Stock Exchange's oil and
gas subindex <.TOG> came on the heels of Wednesday's 3 percent
slide, and was made worse by sharply lower North American
natural gas prices.
Benchmark West Texas Intermediate crude sank $2.04 a
barrel, or more than 10 percent, to $17.70, its lowest level
since June 1999. Gas futures were off 13 cents per million
British thermal units, or 4.7 percent, to $2.555 on Thursday.
Duncan Mathieson, analyst with Scotia Capital Markets, said
the brokerage cut its oil-price outlook to $17 a barrel in 2002
after Wednesday's surprise decision by the Organization of
Petroleum Exporting Countries.
It is too early to call the bottom for Canadian energy
stocks, Mathieson said.
"We've basically said that the appropriate decision here is
to go stand on the sidelines until the game of chicken is over,
and that's what we're in with OPEC and non-OPEC," Mathieson
said.
"We know there's too much oil, we're seeing inventories
rise, and we know demand is sloppy. We need to see some
discipline out of some suppliers and that's usually OPEC, and
they've chosen not to do it," he said.
The TSE oils were off about 670 points to 8261.34, as
investors punished most severely those producers with large
proportions of crude output.
Talisman Energy Inc. <TLM.TO> fell C$6.55 to C$52, Alberta
Energy Co. Ltd. <AEC.TO> fell C$4.40 to C$55.30, Suncor Energy
Inc. <SU.TO> fell C$3.26 to C$43.29, and Petro-Canada <PCE.TO>
sank C$3 to C$36.05.
Expectations of sharply lower cash flow and capital
spending among Canadian producers as commodity prices wilt also
hit oil field service shares. Precision Drilling Corp. <PD.TO>,
the country's biggest service concern, slid C$5.11 to C$33.20,
while No. 2 rival Ensign Resource Service Group Inc. <ESI.TO>,
fell 83 Canadian cents to C$11.92.
Oil prices started the steep drop on Wednesday after OPEC
ministers, meeting in Vienna, agreed to cut production by 1.5
million barrels a day, but not until Jan. 1 and only if
non-OPEC producers, notably Russia, knuckled under and chopped
about 500,000 barrels a day as well.
Russia, the world's second biggest exporter after OPEC
kingpin Saudi Arabia, has so far offered a only a token
reduction of 30,000 barrels a day.
(1=$1.59 Canadian)
((Jeffrey Jones, Reuters Calgary bureau (403) 531-1624,
jeff.jones@reuters.com))
REUTERS
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