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Loonie Seen Reaching 69 U.S. Cents on Oil

(Corrects currency forecasts in headline and the first two paragraphs.) (Bloomberg) — The Canadian dollar will sink as low as 69 U.S. cents with little to drive the economy after oil’s collapse, according to Macquarie Group Ltd, joining a growing list of forecasters lowering their projections. Macquarie forecast Monday the currency would reach a bottom near 69 U.S. cents. Royal Bank of Canada and Credit Suisse Group AG last week lowered their forecasts to 75 cents. HSBC Holdings Plc is calling for a 74 cent Canadian dollar. Morgan Stanley sees the loonie dropping to 71 U.S. cents by next year. “There’s going to need to be even more Canadian dollar weakness than people expect because of the significant loss of competitiveness,” Evan Brown, an analyst with Morgan Stanley, said by phone from New York. With consumer debt loads at a record high, manufacturing hobbled by the surge in the […]

Posted On : Published By : Tom Whipple
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Fed Says Some Banks Tightened Oil-Industry Loans as Crude Fell

(Bloomberg) — The Federal Reserve said some banks tightened standards or terms to energy-industry borrowers in the fourth quarter, after the price of oil plunged. U.S. banks “reported little change in their standards” for commercial and industrial loans overall, the Fed said today in its Senior Loan Officer Opinion Survey, conducted Dec. 30 to Jan. 13 with 73 domestic banks and 23 U.S. branches of foreign banks. “Banks which reported having tightened either their standards or terms on C&I loans predominantly pointed to industry-specific problems as the main reason for having tightened their lending policies to non-financial businesses,” the Fed said. “Some survey respondents specifically noted their concerns about the oil and gas sector resulting from the sharp decline in the price of oil as a reason that they had tightened their lending policies.” West Texas Intermediate crude futures for March delivery declined below $45 a barrel last week […]

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U.S. Factories Brace for Oil Shock as Growth Cools: Economy

A factory worker assembles transmission components for Chrysler Group LLC vehicles in Tipton, Indiana. (Bloomberg) — America’s factories are bracing for trouble and hoping it doesn’t last. The Institute for Supply Management’s manufacturing index declined to a one-year low of 53.5 from December’s 55.1, according to data from the Tempe, Arizona-based group Monday. Readings greater than 50 signal growth. Another report showed consumer spending fell in December after surging over the previous two months. While gauges of orders, exports and production cooled last month, the comments from respondents were more positive, with the makers of food, autos and computers saying sales remained strong so far in 2015. That signals the 50 percent drop in oil prices in the second half of last year has created winners and losers — energy consumers versus producers — and is making manufacturers hesitate as they await the shakeout. “With the deep downdraft in […]

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Exxon’s Profit Drops 21% as Production Declines

Refining and marketing earnings fell by 54% to $497 million. ENLARGE Illustration: Getty Images Exxon Mobil Corp. ’s quarterly cash flow fell to its lowest level since 2009, as the plunge in oil prices led the company to pile on debt and spend less money buying back its shares. The largest U.S. energy company reported a $6.57 billion profit for the last three months of 2014, a 21% decrease from a year earlier, on revenue of $87.28 billion. Earnings per share of $1.56 beat analysts’ expectations. The company’s stock was up less than 1%, to about $88, in midday trading. Exxon pumped slightly less than four million barrels a day of oil and gas in 2014, the least since 2009 and the third consecutive year output has declined. The company said it met its production goal and completed projects from Russia to Canada that will add up to 250,000 […]

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Imperial Oil Profit Falls 36%

Imperial Oil Ltd. , the Canadian subsidiary of Exxon Mobil Corp. , posted a 36% decline in fourth-quarter earnings on Monday, hurt by lower oil prices and volumes. Imperial Oil said the continued slump in oil prices reduced earnings by about 100 million Canadian dollars ($78.7 million), while lower volumes shaved about C$50 million from profits. The Calgary, Alberta-based integrated energy company said its quarterly profit fell to C$671 million, or 79 Canadian cents a share, from C$1.06 billion, or C$1.24 a year earlier. Earnings came in ahead of the 72 Canadian cents a share analysts polled by Thomson Reuters were expecting. Revenue of C$8.03 billion was down from C$8.36 billion a year earlier. Lower commodity prices also took a bite out of parent Exxon’s earnings. It reported a 21% drop in fourth-quarter earnings earlier Monday and unveiled plans to slash its share buyback program. Imperial Oil said production […]

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Energy-Pinching Americans Pose Threat to Power Grid

ENLARGE Even in parts of the country where the population has been growing, electricity sales have been anemic. Retail sales to homes and businesses still are less than they were in 2007, before the recession. Photo: Bloomberg News The long-term future of the nation’s electric grid is under threat from an unlikely source—energy-conserving Americans. That is the fear of some utility experts who say that as Americans use less power, electric companies won’t have the revenue needed to maintain sprawling networks of high-voltage lines and generating plants. And if the companies raise rates too high to make up for declining sales volumes, customers will embrace even more energy-saving gizmos and solar panels, pushing down demand for grid power. The Edison Electric Institute, the trade group for investor-owned utilities, has warned that they could face a “death spiral.” “Utilities seem to have concrete shoes on,” says Elisabeth Graffy, co-director of […]

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After Record Decline, Drop In Fuel Prices May Be Running Out of Gas

Getty Images That decline in fuel prices that’s given millions of consumers across America reason to cheer? It looks like it’s running out of gas. The average per-gallon pump price for gasoline in the U.S. on Monday rose for the seventh straight day to $2.06, according to AAA . That follows 123 straight days of declines, a record, according to the motor club. Retail gasoline prices hit a nearly six-year low of $2.03 on Jan. 26. Seasonal trends in gasoline production and demand are a big factor behind the stabilization in prices. Refineries tend to scale back operations to make repairs in the first and second quarters, which curbs supplies. And consumption typically rises in the second quarter as the weather improves and people start driving more. It’s likely that gasoline prices have bottomed out for now, some experts say. To be sure, prices remain well below year-ago levels. “It […]

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Obama Budget Would Pour Funds Into Climate, Renewable Energy

ENLARGE President Obama’s budget released Monday includes a new $4 billion fund to help states comply with draft Environmental Protection Agency regulations cutting carbon emissions from U.S. power plants. Photo: Luke Sharrett/Bloomberg News WASHINGTON—President Barack Obama ’s fiscal 2016 budget plan would pour billions of dollars into climate-change and renewable-energy technologies, and repeal nearly $50 billion in tax breaks from the oil, natural-gas and coal industries. The budget proposal, released Monday, underscores an intensifying push by Mr. Obama on his climate agenda, which he hopes to cement as a presidential legacy in his final two years in office. While many of Mr. Obama’s energy and environmental plans have been included in prior year proposals, the 2016 proposal includes a new $4 billion fund, dubbed the Clean Power State Initiative Fund, to help states comply with draft Environmental Protection Agency regulations cutting carbon emissions from U.S. power plants. The fund, […]

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Cash-Starved Oil Producers Trade Treasured Pipelines for Money

(Bloomberg) — Oil and natural gas producers confronting a cash drain are auctioning off the family silver: pipelines and processing plants. Bakken shale billionaire Harold Hamm and Canadian gas giant Encana Corp. are among the latest to peddle some of their most valuable assets and steadiest earners. They don’t have much choice — as the oil price collapse deflates the value of drilling operations, pipes and plants are about the only things attracting big payments for producers vying to stay afloat. The deals for quick cash are another facet of the energy industry meltdown leading to more than $40 billion in spending cuts and thousands of job losses. The capital infusion comes with a trade-off because producers pay more to process and transport fuel over the lines and in the facilities they used to own. “At some point they all get desperate enough,” said Michael Formuziewich, a fund manager […]

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Three More Energy Companies in Texas Warn of Layoffs

Hundreds more oil-industry workers in Texas—including 330 in the oil and gas division of General Electric Co. —are about to lose their jobs as U.S. crude prices languish below $50 a barrel. In recent letters sent to the Texas Workforce Commission, GE Oil & Gas and two other energy companies warned state regulators of plans to cut 720 employees around the state. GE said it would cut about 45% of staff at its Buck Creek oil field equipment manufacturing plant in Lufkin, Texas, about 120 miles northeast of Houston. The layoffs are scheduled to begin in late March and are part of a restructuring drive to reduce costs, the company said. This “is a decision we don’t take lightly but one we must undertake for the long-term health of the business,” the company said. Analysts at Moody’s Investors Service said oil and gas has been an engine of growth […]

Posted On : Published By : Tom Whipple