Author Topic: CAD / USD  (Read 6981 times)

scorpioncapital

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Re: CAD / USD
« Reply #20 on: January 05, 2018, 05:00:50 AM »
My philosophy is to be short all currencies in Western nations and long business, commodities, and a select few currencies farther east.
I would be short, in proportion, everything. Right now, interest rate at IB on loans in CAD are slightly below USD. I'm also thinking to be somewhat short Euro because loans there are even less and IB just put out a note that in some currencies, due to volatility over the new year you must PAY to hold a long position in them of a pretty substantial amount!





Uccmal

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Re: CAD / USD
« Reply #21 on: January 05, 2018, 06:29:21 AM »

Doesn't Canadian crude trade at a steep discount compared to other oil benchmarks because of it's lack of export markets? And aren't they already near their export limit because of lack of pipeline capacity?

My understanding was USA purchases the Canadian oil at a discount because the Canadian sellers have no other export markets?

What about the prices of other natural resources (gold, nickel, uranium, potash, rare earth metals) Isn't Canada in a position to start exporting some of the rare earth metals used in batteries?
Well it's actually a lot more complicated than that. The fact that it's landlocked does play a part in the price. But a huge part of the discount is the fact that Canadian crude is a heavy grade. Heavy crude is cheaper than light crude. So generally you expect WCS to be at a discount to WTI.

Keystone XL also got approved so there's new pipeline capacity coming online. But even without that you can still put it on a train and then on a ship. On top of everything oil isn't really traded but is actually sold to customers. Say that you have XYZ refinery in the Midwest that buys crude from a certain oilfield in Alberta. That refinery is optimized to process that particular crude. Say there's even a pipeline for ABC field to XYZ refinery. The refinery doesn't have many options. It will buy that crude from ABC field. It's not easy for refiners to change suppliers. We call that black stuff oil and think it's all the same but it's really not.

Anyway that's a sort of explanation from a simpleton like me. I'm sure someone from the oil business can explain it better because this stuff is surprisingly complex.

I think you did a good job outlining the nuances.  Add to that, many of the minor E&Ps sell light crude, and price to the edmonton hub.  At any rate most of the smaller E&Ps have presentations that show their cash flow relative to levels in the cdn dollar versus US, and WTI as a reference price.  They include the discounts within their cash flow projections. 

And the oil moves back and forth across the border depending on what type is processed where, and where the end markets are.  The oil is moved via pipelines which are toll booths run by Enbridge, Kinder Morgan, and smaller players. 

It is entirely feasible that Cdn oil is going to Texas and then onto Europe. 
GARP tending toward value

alpha

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Re: CAD / USD
« Reply #22 on: March 21, 2018, 01:56:34 PM »


This afternoon the CAD/USD is up ~1.4%

There was some positive news about NAFTA this morning, but I don't understand how it can rise so much after the US Fed announced confidence and more rate rises.


Jerry Capital

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Re: CAD / USD
« Reply #23 on: April 30, 2018, 07:57:58 AM »
The oil price is no longer gonna move CAD (the 2 yr differential will) because GDP from oil production in Canada is now a rounding error.

A sustained move to even $75 per barrel for multiple years would be required to get serious new CAPEX too boost its percentage of GDP enough to be relevant to move the CAD.

Told you 👆