An analyst says one-third of the companies could be bankrupt by the end of next year.
Doomsday may finally be coming to the fracking industry.
Despite the big drop in oil prices in the past year, there have been relatively few bankruptcies in the energy industry. That may be about to change. James West, an energy industry analyst at ISI Evercore, says months of low activity have left many of the companies in the hydraulic-fracturing business either insolvent or close to it. He says as many as a third of the fracking companies could go bust by the end of next year.
“This holiday will not be a time of cheer in the oil patch,” says West.
So far oil and gas exploration companies, while cutting back somewhat, have continued to spend based on budgets set a year ago when oil prices were much higher. But now West says the price of oil is catching up to them, and they may soon have to drastically cut back their spending on services. The catalyst is the banks.
Banks lend to oil exploration companies based on the value of their reserves.But they only audit the value of those reserves every October. Given how much oil prices have tumbled in the past year, many analysts expect banks to greatly reduce in the next month how much they are willing to lend to oil and gas companies. Regulators, worried banks may face losses, have recently been pressuring banks to cut back their lending to oil and gas companies. Den Rest des Beitrags lesen »
Economist at the Research Department, Bank of Israel
The 2014 decline in oil prices lowered short-run inflation. Before the Global Crisis, the medium-term correlation between oil prices and inflation was weak, but it has become much stronger since the onset of the Crisis.This column suggests that following the onset of the Crisis, inflation expectations reacted quite strongly to global demand conditions and oil supply shocks. The public’s belief in the ability of monetary authorities to stabilise inflation at the medium-term horizon has deteriorated.
The sharp decline in oil prices starting in late 2014 sparked a debate about their effect on inflation and the world economy (e.g. World Bank 2015). The decline in oil prices lowered inflation in the short run, and in some cases pushed some economies that were already experiencing very low inflation into deflation. More surprisingly, data from the US, the Eurozone, the UK, and Israel show that oil prices have a strong correlation with inflation expectations for the medium term, as measured by five-year breakeven inflation rates.1 Before the Global Crisis, this correlation was weaker and expectations were firmly anchored at the 2% level. However, from the onset of the Global Crisis, the correlation has been quite high (Table 1 and Figure 1).
In der ersten Jahreshälfte 2015 haben Anleger insgesamt 32 Milliarden Dollar aus der US-Frackingindustrie abgezogen. Die Branche leidet aufgrund des Ölpreisverfalls unter einer Pleite-Welle. Die Öl- und Gasproduktion wird zurückgefahren.
Anleger haben in den ersten beiden Quartalen des aktuellen Jahres insgesamt 32 Milliarden Dollar aus der US-Frackingindustrie abgezogen. Im vergangenen Jahr verzeichnete die Branche ein Defizit von insgesamt 37,7 Milliarden Dollar, meldet Factset.
Die Unterdeckung weist auf einen Anstieg der Insolvenzen und Restrukturierungen in der Branche hin, die in den vergangenen sieben Jahren rasant erweitert wurde. Nach Informationen des US-Energieministeriums ist die US-Ölproduktion im Mai und Juni zurückgegangen. Fracking-Unternehmen haben Anteile und Vermögenswerte verkauft und sich Geld geliehen, um die Produktion zu erhöhen und ihre Reserven aufzustocken.Die Gesamtnettoverschuldung der US Öl- und Gasproduktionsfirmen lag Ende 2010 bei mehr als 81 Milliarden Dollar. Bis Ende Juni 2015 verdoppelte sich die Verschuldung auf 169 Milliarden Dollar.
„Die Kapitalmärkte waren für diese Firmen derart zugänglich, dass jene Firmen sich massiv verschuldet haben“, zitiert die Financial Times Terry Marshall von der Rating-Agentur Moody ‚s. Die Kreditaufnahme erfolgte trotz des stetig fallenden Ölpreises. Allerdings gibt es nun Anzeichen dafür, dass sich der Kapitalfluss verlangsamt. US-Förderer haben im ersten Quartal des aktuellen Jahres Aktien im Wert von 10,8 Milliarden Dollar verkauft. Doch dieser Anteil betrug im zweiten Quartal 3,7 Milliarden Dollar und fiel im Juli und August weiter auf eine Milliarde Dollar, meldet das finanzunternehmen Dealogic. Den Rest des Beitrags lesen »
LONDON – Violent swings in oil prices are destabilizing economies and financial markets worldwide. When the oil price halved last year, from $110 to $55 a barrel, the cause was obvious: Saudi Arabia’s decision to increase its share of the global oil market by expanding production. But what accounts for the further plunge in oil prices in the last few weeks – to lows last seen in the immediate aftermath of the 2008 global financial crisis – and how will it affect the world economy?
The standard explanation is weak Chinese demand, with the oil-price collapse widely regarded as a portent of recession, either in China or for the entire global economy. But this is almost certainly wrong, even though it seems to be confirmed by the tight correlation between oil and equity markets, which have fallen to their lowest levels since 2009 not only in China, but also in Europe and most emerging economies.
The predictive significance of oil prices is indeed impressive, but only as a contrary indicator: Falling oil prices have never correctly predicted an economic downturn. On all recent occasions when the price of oil was halved – 1982-1983, 1985-1986, 1992-1993, 1997-1998, and 2001-2002 – faster global growth followed. Den Rest des Beitrags lesen »
A decade of bingeing on raw materials may leave an even longer hangover
IT WAS only a decade or so ago that Scotland was hit by the “Great Drain Robbery”, the disappearance of 50 manhole covers in Fife. It gave an inkling of the emergence of a new era in commodity markets, spurred by insatiable demand from China. Scrap-metal prices—and so scrap-metal thefts—soared. Africa was over-run by Chinese engineers; Australia elected a Mandarin-speaking prime minister; and emerging markets from Argentina to Zambia relished the rising values of their farmland and mines. The boom was fanned by a weak American dollar, the currency in which most stuff that comes out of the ground is priced.
The gears have now gone into reverse. A resurgent dollar has hammered commodity prices: many have recently fallen below their levels of a decade ago.That is a fate not shared by other tradeable assets: not since the late 1990s have commodity prices been so weak compared with shares (see chart 1). The American economy is strengthening, but by no means enough to encourage thieves to filch bronze bells from Chinese temples to send as scrap to the United States. The impact of its recovery is dwarfed by slowing demand in China, which still consumes about half the world’s metals such as iron, aluminium, and zinc. Den Rest des Beitrags lesen »
NEW YORK—U. S. oil prices fell Monday to a fresh six-year low on concerns that the glut of crude oil is set to grow.
Light, sweet crude for September delivery fell 63 cents, or 1.5%, to $41.87 a barrel on the New York Mercantile Exchange, the lowest settlement since March 3, 2009. Brent, the global benchmark, fell 45 cents, or 0.9%, to $48.74 a barrel on ICE Futures Europe. Den Rest des Beitrags lesen »
One of the biggest banks in the Middle East and the oil-rich Gulf countries says that fossil fuels can no longer compete with solar technologies on price, and says the vast bulk of the $US48 trillion needed to meet global power demand over the next two decades will come from renewables.
The report from the National Bank of Abu Dhabi says that while oil and gas has underpinned almost all energy investments until now, future investment will be almost entirely in renewable energy sources.
The report is important because the Gulf region, the Middle East and north Africa will need to add another 170GW of electricity in the next decade, and the major financiers recognise that the cheapest and most effective way to go is through solar and wind. It also highlights how even the biggest financial institutions in the Gulf are thinking about how to deploy their capital in the future. Den Rest des Beitrags lesen »
As crude tumbles in its worst summer ever, experts are lining up to forecast exactly how low it will go.
Among the lowest so far is $10 to $20 a barrel, which came from Gary Shilling, president of A. Gary Shilling Co., who spoke in a Bloomberg Television interview on Friday. Because fixed costs are already spent, drillers in a “price war” will keep pumping as long as prices are above the cash costs of production, which are below today’s levels of around $49 a barrel in London.
“Formula for success: rise early, work hard, strike oil.”
– J. Paul Getty
This week’s yuan devaluation was big news, but it’s really part of a much bigger saga. Events around the globe are combining to create huge economic change over the next few years. We are watching giant, multidimensional chess games played by some master players.
Energy is the chessboard that connects all the players. What happens when the board changes shape in the middle of the game? If you don’t know the new energy landscape, you’ll have a hard time playing to a draw, much less winning.
Today I’ll tell you about some big shifts in the energy industry. These shifts are about as positive as can be, unless you need high oil prices to run your country. In the long run, these changes are bullish for the whole world, which I think this will surprise many of you. And though we’ve been used to thinking about energy and technology as two different facets of modern life, today they are inextricably linked.
Source: Project Syndicate
MOHAMED A. EL-ERIAN
Mohamed A. El-Erian, Chief Economic Adviser at Allianz and a member of its International Executive Committee, is Chairman of US President Barack Obama’s Global Development Council. He previously served as CEO and co-Chief Investment Officer of PIMCO. He was named one of Foreign Policy’s Top 100 Global Thinkers in 2009, 2010, 2011, and 2012. His book When Markets Collide was the Financial Times/Goldman Sachs Book of the Year and was named a best book of 2008 by The Economist.
LAGUNA BEACH – Oil prices have been heading south again, with a barrel of US crude recently falling below $42 – the lowest level since March 2009, the nadir of the global financial crisis. And, while last year’s sharp price drop was heavily influenced by two large supply shocks, the current decline also has an important demand dimension.
At the same time, oil markets are discovering what it is like to operate under the regime of a new swing producer: the United States. As a result, the price formation process is much clumsier nowadays, with considerably longer adjustment lags. Den Rest des Beitrags lesen »