OIL EDGES DOWN AFTER STRONG ADVANCE
Brent, the global benchmark, was down 0.41%, at $58.80 a barrel on London’s Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading down 0.30%, at $52.47 a barrel.
“It can’t really go above $60” a barrel, Giovanni Staunovo, a commodity analyst at UBS Wealth Management, said of the price of Brent. “If it goes too high, it’s an indication to U.S. shale producers to produce more oil”—a development that could undermine the oil market rebalancing under way.
TOTAL’S RENEWABLES UNIT POSTS STEEP EARNINGS DECLINE
French oil giant Total SA’s new gas, renewables and power division reported a 49% decline in earnings for the third quarter compared with last year, Sarah Kent reports.
Challenging market conditions in the solar-power sector weighed on the unit, which has major solar operations in the U.S. The division generated $97 million in operating income in the third quarter, the company said.
Total has “moved more aggressively than many of its peers into the renewables and power sectors, making numerous acquisitions to bolster its footprint. Last year, it paid $1 billion for a French maker of industrial batteries and it owns a majority stake in California-based solar panel maker SunPower Corp.,” Ms. Kent writes.
But Total’s oil-and-gas exploration and production business still comprises the majority of its operations. That core business boosted overall earnings in the third quarter, with net profit climbing by 39%, to $2.7 billion, compared with the year prior.
BREAK-EVEN IS THE NEW METRIC FOR BIG OIL
The world’s biggest oil companies are now measuring success by whether they break even, in a sign of how the lower oil price environment has shifted priorities for the major players in the industry, reports Sarah Kent.
With crude prices trading in a range of $50- to $60 a barrel, Europe’s big oil companies have reduced break-evens to around $50 a barrel, according to Barclays. The metric signifies the oil price a company needs to meet its capital spending and dividend payout requirements.
“The industry’s intense focus on the break-even represents a stark change from the era of rising oil prices, when the emphasis often was more on companies’ ability to increase production rather than to generate cash,” Ms. Kent writes.
OIL GIANTS PUSH GREEN INVESTMENTS
A group of the world’s biggest oil companies gathered in London Friday to lay out their progress in building an industry response to efforts to tackle climate change.
Oil giants including BP PLC, Royal Dutch Shell PLC and Total SA laid out their ambitions to reduce methane emissions from natural gas production and invest in carbon capture and storage technology to make the industry more fit for a low-carbon future.
The companies gathered for the third annual report of the Oil and Gas Climate Initiative, established in 2014 by the CEOs of companies including Europe’s oil majors and state oil companies like Saudi Aramco to look at ways the industry can work together to reduce greenhouse gas emissions. It’s billion dollar fund announced new investments in three companies that are working to clean up areas of fossil fuel use.
The group has drawn criticism from environmental groups as an exercise in “greenwashing.” The oil executives said they are putting real money behind practical solutions, though they didn’t reveal the amount of the investment announced Friday.