THREE YEARS ON OIL INDUSTRY COMES TO TERMS WITH CHEAP CRUDE
The oil industry has finally gotten the message that crude prices may stay lower for longer, reports The Wall Street Journal.
Following the more than two-year slump in oil prices brought on by an oversupply of crude “petro states, investors and major oil companies are adapting to a world in which they see a range of $50 to $60 a barrel as the new equilibrium,” write Georgi Kantchev, Sarah Kent and Erin Ailworth.
The downturn in crude has hurt company profits and savaged national budgets from Russia to Venezuela but now companies are adapting to the new low.
Oil producers have cut costs, focused on more profitable assets and no longer throw money at costly projects in places like the Arctic.
“Chevron Corp., Royal Dutch Shell PLC, Exxon Mobil Corp. and BP PLC have all indicated they will be able to generate enough cash at $60 a barrel to cover their spending and shareholder payouts this year—a major focus for investors worried about the safety of their dividends. At $50 a barrel, the picture is more mixed. But the companies say they are focused on living within their means at even this price,” the Journal reports.
Oil prices edged slightly higher on Monday, but analysts foresee little upward momentum for crude given the continued oversupply that has kept pressure on.
Brent crude, the global benchmark, was up 0.2%, to $47.44 a barrel, in London mid morning trading. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.1%, at $44.78 a barrel.
ECB: EUROZONE CURRENT-ACCOUNT SURPLUS SHRINKING AS OIL PRICES RECOVER
The Eurozone’s large trade surpluses have started to shrink as oil prices recover, reports Tom Fairless for Dow Jones Newswires.
The European Central Bank said on Monday “the EU’s surplus started to shrink in the second half of last year as oil prices recovered. It said the increase in the surplus between mid-2014 and mid-2016—from around 2% to 3.3% of GDP—was largely due to lower oil prices,” Mr. Fairless reports.
Germany’s trade surpluses have become a point of contention after a senior Trump administration official accused Berlin of using an undervalued euro to exploit its trading partners.
Germany is the biggest Eurozone economy and is responsible for the lion share of the zone’s trade surpluses.