SAUDI: GORILLA IN THE ROOM
Another horrendous year is drawing to a close in the oil patch. After starting out with hopes of a rebound, 2015 will instead punctuate the worst two years ever suffered by U.S. crude producers.
West Texas Intermediate futures are heading for their biggest-ever two-year drop, while the Standard & Poor's Energy Sector Index is set to mark its first consecutive decline since 2002. Futures and equities will post December decreases, signaling more discomfort as 2016 starts.
Oil has tumbled since Saudi Arabia led the Organization of Petroleum Exporting Countries in November 2014 in deciding to maintain output and defend market share against higher-cost producers, generating a record supply glut. Record output this year from Saudi Arabia, Russia and Iraq has boosted global stockpiles to an all-time high, the International Energy Agency said on Dec. 11.
"The 800-lb. gorilla in the room, and by that I mean Saudi Arabia, showed it's power," said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. "They are on a mission to squeeze out the high-priced producers and aren't done yet. Things could get very ugly in the second and third quarters for countries like Venezuela and Nigeria and for U.S. exploration companies."
The North American shale and oil-sands plays have been bludgeoned by OPEC's policy change. Chesapeake Energy Crop., CONSOL Energy Inc. and Southwestern Energy Co. are the three worst-performing shares of the S&P 500 this year, all losing in excess of 75 percent of value.
WTI tumbled 46 percent in 2014, the biggest drop since the recession in 2008. Futures, which are down 31 percent this year, traded at $36.95 a barrel at 8:56 a.m. on the New York Mercantile Exchange. The S&P Energy Index slipped 10 percent in 2015 and is down 23 percent this year.
"Oil is probably the market with the biggest reputation for going from boom to bust," said Tim Evans, an energy analyst at Citi Futures Perspective in New York. "It's pretty clear that we've seen substantial bust. The temptation has to be that a boom is around the corner but that big idea isn't necessarily a guide to market timing."
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AOG - The Dubai Electricity & Water Authority (DEWA) is to invest around $22bn on new energy projects across the next five years, with the renewables sector accounting for an increasing share of electricity generation, according to CEO Saeed Mohammed Al Tayer.
TRANSCANADA - TransCanada Corporation (TSX:TRP) (NYSE:TRP) (TransCanada or the Company) announced net income attributable to common shares for fourth quarter 2017 of $861 million or $0.98 per share compared to a net loss of $358 million or $0.43 per share for the same period in 2016. For the year ended December 31, 2017, net income attributable to common shares was $3.0 billion or $3.44 per share compared to net income of $124 million or $0.16 per share in 2016.
ROSATOM - February 13, 2018, Moscow. – ROSATOM and the Ministry of Scientific Research and Technological Innovations of the Republic of Congo today signed a Memorandum of Understanding on cooperation in the field of peaceful uses of atomic energy.
FRB - Industrial production edged down 0.1 percent in January following four consecutive monthly increases. Manufacturing production was unchanged in January. Mining output fell 1.0 percent, with all of its major component industries recording declines, while the index for utilities moved up 0.6 percent. At 107.2 percent of its 2012 average, total industrial production was 3.7 percent higher in January than it was a year earlier. Capacity utilization for the industrial sector fell 0.2 percentage point in January to 77.5 percent, a rate that is 2.3 percentage points below its long-run (1972–2017) average.