What to Watch
Energy Prices Dig Into Miners’ Profits
Mining companies are grappling with how to keep rising energy costs from eating into their profits, writes the Wall Street Journal’s Rhiannon Hoyle.
Companies including BHP Billiton Ltd., Rio Tinto Ltd. and Glencore PLC have all introduced cost-cutting measures such as driverless trucks and job cuts to keep overhead down during a previous commodities bust
Now that the firms are finally making money, climbing costs for fuel, wages and chemicals are weighing on the sector.
Energy bills are rising after an oil rally of more than 20% this past year.
A depreciating U.S. dollar versus the currencies of top mining countries is also putting pressure on margins, as commodities are mostly sold using the U.S. currency.
“Clearly, inflation’s becoming a bigger issue,” said Anglo American PLC Chief Executive Mark Cutifani.
Meanwhile, oil prices edged down Tuesday morning, as fresh signs of rising U.S. shale production appeared to put a cap on prices.
Brent crude, the global benchmark, was down 0.25% at $64.81 a barrel on London’s Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were also trading down 0.08% at $61.32 a barrel.
Exxon Reviewing Plan to Double Gulf Coast Refining Footprint
Exxon Mobil Corp. is considering a plan to double its refining capacity in the U.S. Gulf Coast, an executive for the firm said.
Mexico’s Top Presidential Candidate Plots Big Shake Up for Mexico’s Oil Industry
The leading candidate for Mexico’s presidential elections signaled a desire to halt the country’s exports of crude oil. According to sources, Andres Manuel López Obrador, a leftist nationalist with a comfortable lead in the polls, views Mexico as having become too dependent on the U.S. for refined gasoline.
“We don’t want to make artificial shortages in the market.”
– Bijan Zanganeh, oil minister for Iran
Russia Aims to Increase Fuel Exports to Europe
Russia aims to fight for its share of the European energy market by ramping up its fuel exports, Reuters reports.
WSJ Energy In-Depth
GE’s Top Executives Miss Out on Cash Bonuses for the First Time
General Electric Co executives got zero in bonuses last year for the first time in the firm’s 125-year history, write Thomas Gryta and Theo Francis.
The Boston-based company said in a regulatory filing Monday that its board withheld the 2017 bonuses and canceled some 2015 equity awards that executives would have partly received.
It cited the conglomerate’s struggles last year, which forced GE to slash its dividend, cut thousands of jobs and overhaul its leadership.
GE said it was changing its executive compensation program for 2018. The company is tying equity awards to total shareholder return.
Bonuses for employees of each operating business will be funded based on segment performance, rather than overall company performance.
The U.S. took in less revenue in February because of the tax cut passed by Congress late last year. The move lowered taxes for several business sectors including the energy industry. The U.S. budget deficit reached $706 billion, 3.6% of gross domestic product, over the 12 months ended February, compared with $583 billion, or 3.1% of GDP, for the same period one year earlier.
Today: API issues forecasts on the U.S. crude inventory.
Wednesday: OPEC will release its monthly oil market report. Also the U.S. Energy Information Administration releases production figures.
Thursday: The International Energy Agency issues an oil market report
The WSJ’s Alison Sider on oil prices. For most of this year, near-term oil prices have been higher than prices further into the future–a structure known as backwardation that is generally considered a signal of a tight market that portends rising prices. But that could be starting to slip: oil futures for April delivery are trading just 3 cents above the May contract–the smallest premium since January. That could be a sign that oil prices could continue to tumble.
WSJ reporter Joanne Chiu on wind power. Chinese Wind turbine maker Xinjiang Goldwind’s shares slipped 2.6% to HK$13.34 after yesterday’s 6.5% rally to a near six-week high. Nomura said the firm’s weaker-than-expected 2017 net profit was due to a one-off provision for arbitration on a defective blades claim. The bank sees earnings rebounding 33% in 2018, thanks to stronger turbine deliveries and reduced provision charges. The bank stuck to its bullish stance on the stock and raised its target by 15% to HK$15.76.