Category:

Moody’s Cuts Credit Rating of Canadian Oil Sands

The rating action targeting the largest owner of Canada’s giant Syncrude oil-sands mining consortium comes amid a swoon in oil prices below $40 a barrel, which has eroded profit margins in the energy industry and made it more difficult for highly-levered oil producers to service their debt loads. Moody’s lowered its creditworthiness assessment of Canadian Oil Sands’ senior unsecured debt to Baa 3 from Baa 2 and kept its “negative” outlook for the Calgary-based company. Baa 3 is Moody’s lowest rung of investment-grade credit and just above the speculative, or junk, grade. “Moody’s expects negative free cash flow [at Canadian Oil Sands] of about 125 million Canadian dollars ($94 million) from June 30, 2015, to September 30, 2016, to be largely debt funded,” it said. The ratings action was prompted by the recent tumble in crude prices to more than six-year lows and Canadian Oil Sands’ deteriorating balance sheet. […]

Posted On : Published By : Tom Whipple
Category:

Risks Grow for Slow but Steady U.S. Expansion

The U.S. has been the tortoise in a global race for economic growth, plodding out a slow but steady expansion while China signals exhaustion and the rest of the world wobbles. Now, market turmoil and China’s troubles threaten to undermine the already unspectacular U.S. outlook. Few economists see a U.S. recession. In fact, some recent developments, including lower oil prices, will help U.S. consumers and businesses. But an uneven global growth outlook is pushing the value of the dollar higher, making U.S. goods more expensive overseas and harder to export. That could restrain the U.S. economy in the months ahead. Stock-market declines could further hurt U.S. consumer sentiment and spending, if the drops are sustained, and they make businesses even less willing to invest. Federal Reserve officials now need to decide if they should alter their planned course on interest rates. Officials have been signaling for months that at […]

Posted On : Published By : Tom Whipple
Category:

Boehner: Oil export ban thwarts success

Speaker of the House John Boehner, R-Ohio, writes an op-ed in Pennsylvania newspaper in support of ending a 1970s ban on U.S. crude oil exports. File Photo by Kevin Dietsch/UPI PITTSBURGH, Aug. 24 (UPI) — U.S. House Speaker John Boehner wrote in a Pennsylvania newspaper the nation’s oil sector is headed for a "brick wall" in the form of a crude oil export ban. "For all its success, this energy boom is currently running into a brick wall in the form of … federal government policies that date back to the 1970s," Boehner wrote in the (Pittsburgh) News-Tribune-Review. Boehner, his Republican colleagues, led by Sen. Lisa Murkowski , R-Alaska, and some Democrats, notably Sen. Heidi Heitkamp, D-N.D., have moved several pieces of legislation aimed at overturning the 1970s ban on the export of domestic crude oil. The ban was enacted after Arab members of the Organization of Petroleum Exporting […]

Posted On : Published By : Tom Whipple
Category:

Gasoline Is Both Incredibly Cheap and Absurdly Expensive

Filling up with gasoline in the U.S. is the cheapest it’s been in a decade and yet way too expensive. The average retail price in the U.S. dipped to $2.595 a gallon yesterday, down 7.5 cents from the previous week and the lowest for this time of year since 2004, according to Heathrow, Florida-based AAA, the nation’s largest motoring group. Costs are sliding on the back of oil futures tumbling for eight consecutive weeks, the longest drop since 1986. Given that crude traded as low as $37.75 a barrel Monday, gasoline should be a lot cheaper. Since AAA started tracking prices in 2004, retail gasoline has only twice been above $2 a gallon while crude was under $40. Prices at the pump are now almost three times as high as oil on a per-barrel basis, the biggest gap on record. There are a couple reasons for the disconnect. Summer […]

Posted On : Published By : Tom Whipple
Category:

BofA Says Collapsing Crude Drags U.S. LNG Exports Down With It

Plummeting crude oil prices have dimmed prospects for soon-to-start U.S. liquefied natural gas exports, Bank of America Corp. said in a note to clients Monday. The gap between U.S. and global prices for the fuel has narrowed as oil’s collapse reduced the cost of crude-linked LNG contracts in Asia and Europe, Max Denery, an analyst at the bank in New York, said in the report. Oil in London has tumbled 25 percent this year, falling below $45 a barrel Monday for the first time since 2009, while U.S. gas has dropped 8.3 percent. The reduced price advantage comes as Cheniere Energy Inc. finishes construction of its Louisiana export terminal, which is poised to send the first shipment of U.S. LNG from the lower 48 states before the end of the year. North American cargoes will enter the market as gas from newly-built Australian terminals adds to a global supply […]

Posted On : Published By : Tom Whipple
Category:

Russian ruble collapses to 7-month low on weak oil prices

AP Photo/Alexander Zemlianichenko MOSCOW (AP) — The Russian ruble plunged 2.9 percent on Monday to hit a seven-month low amid a further drop in oil prices, the country’s key export. The ruble was trading at 71.04 to the dollar at the close of trading in Moscow, its lowest level since Jan. 30, when Russian markets were hit by a combination of low energy prices and Western sanctions. After the market closed, the ruble recovered slightly in futures trading in an indication that it may recover some of its losses. Oil is the backbone of the Russian economy and the fall of the ruble follows a sharp decline in the price of crude. The U.S. oil contract on Friday dropped below $40 per barrel for the first time since 2009 and on Monday was down another $1.23 a barrel at $39.22. The ruble’s slide was accompanied by falls in the […]

Posted On : Published By : Tom Whipple
Category:

Russia Trims GDP Forecasts as New Oil Plunge Batters Ruble

Russia lowered its economic forecasts for this year and next year as a renewed plunge in energy prices sank the ruble and sanctions over Ukraine looked set to persist. Gross domestic product in the world’s largest energy exporter will fall 3.3 percent in 2015 before rebounding as much as 2 percent in 2016, Economy Minister Alexei Ulyukayev said Tuesday in Kuala Lumpur, the Interfax news service reported. The ministry had earlier projected a 2.8 percent contraction followed by 2.3 percent growth. Russia’s slump reached a “fragile” bottom last month, Ulyukayev said, predicting an improvement in the economy in the fourth quarter. “I don’t think we’ll go any lower but it’s hard to say when we’ll see significant growth.” Russia, mired in its first recession in six years, is battling a new wave of oil-price weakness that’s sent the ruble to its lowest level against the dollar in seven months. […]

Posted On : Published By : Tom Whipple
Category:

Oil slides to 6-year low as commodities tumble

Sign up for quick access to a wealth of global business news, including: Oil slides to 6-year low as commodities tumble Newspaper + Premium online Newspaper + Premium online Premium Full FT.com subscription Premium Full FT.com subscription Standard Full news & archive Standard Full news & archive Trial Try Premium online Trial Try Premium online Price Monthly Annual $66.30 $11.77 per week $53.00 $9.25 per week $36.00 $6.45 per week $1.00 for 4 weeks $1.00 for 4 weeks FT Alphaville plus selected FT blogs yes yes yes yes Unlimited FT.com article access yes yes yes yes Unlimited mobile and tablet access yes yes yes yes Unlimited fast FT yes yes yes yes 5 year company financials archive yes yes yes yes The LEX column yes yes no yes ePaper access yes yes no yes Three exclusive weekly emails yes yes no yes Daily newspaper delivery yes no no For […]

Posted On : Published By : Tom Whipple
Category:

Oil Tumbles to Fresh Lows on China Market Turmoil

Oil prices tumbled to fresh lows in Asian trade Monday, in line with the selloff in wider financial markets, as investors were shaken by the rout in Chinese equity markets and worries about global economic growth. Brent crude, the global oil-price benchmark, dropped below the $45 a barrel mark for the first time since March 2009. It is now trading around 56% lower from its year-high of $103.19 a barrel reached in August last year. Oil prices have been under pressure for several months due to oversupply concerns, but the slump deepened in recent weeks on fears of a sharp slowdown in the Chinese economy and its impact on global markets. The recent devaluation of the yuan also added to market uncertainty, stoking concerns that China’s oil and commodities imports could fall further. On the New York Mercantile Exchange, light, sweet crude futures for delivery in October traded at […]

Posted On : Published By : Tom Whipple
Category:

Brent, U.S. oil mark fresh 6-1/2-year lows on China and oversupply

A service truck drives past an oil well on the Fort Berthold Indian Reservation in North Dakota, November 1, 2014. Brent and U.S. crude oil futures hit fresh 6-1/2-year lows on Monday to drop below the latest supports of $45 a barrel and $40 a barrel respectively as investors fretted that a slowing Chinese economy will lead to weaker demand amid a global supply surplus. Other commodities also hit fresh lows in early Asian trading as fears spread that a more severe slowdown in China would pull down other economies in the region, denting energy and raw material consumption. Brent oil LCOc1 was trading down 82 cents a barrel at $44.64 as of 0425 GMT (0025 EDT), after hitting an intraday low of $44.24, its lowest since March 2009. On Friday it ended $1.16, or 2.5 percent, lower at $45.46 a barrel. U.S. October crude CLc1 fell 93 cents […]

Posted On : Published By : Tom Whipple