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Daily Archives: April 24, 2009
Francisco Blanch, head of global commodities research at Banc of America Securities-Merrill Lynch, will answer readers’ questions on the impact of recession and recovery on oil prices, on Monday April 27.
Arguments that the oil price shock contributed to a US recession are continuing to create discussion, particularly James Hamilton’s paper published by the Brookings Institution. We wrote about it earlier this month, and it has since been picked up by the Atlantic, and the WSJ.
A reminder for those tempted to dismiss Hamilton’s report out of hand: he’s talking about Q4 of 2007 to Q3 of 2008. It is a matter of conjecture, he writes whether the subsequent, much steeper downturn from Q4 of 2008, would have been avoided or merely postponed if the economy had not already been in recession. He concludes: “Regardless of how we answer that question, the evidence to me is persuasive that, had there been no oil shock, we would have described the U.S. economy in 2007:Q4-2008:Q3 as growing slowly, but not in a recession.” Read more
The first quarter oil company results season continues today, with Eni and Schlumberger following the lead set by ConocoPhillips and Occidental on Thursday: earnings fell, but by less than analysts had feared.
There are other pointers in today’s statements to encourage hopes that, now oil appears to be stabilising at about $50 per barrel, the outlook for the industry is brightening up. Read more
Is “peak demand” possible for rich countries’ energy use? CERA is publishing a very interesting report today on the potential for energy efficiency gains in Europe, which concludes that the EU has the potential for an “unpredecented” reversal in its energy use, with power consumption levelling off and gas consumption falling quite sharply. This could all be done using existing technology, CERA believes, and would still take Europe only about half-way to meeting the EU’s ambitious target of a 20 per cent improvement in energy efficiency by 2020.
The question is: how much will it cost? Read more
As many of the biggest banks are no longer an option, the world’s big oil companies are now among the best for investors seeking dividend growth.
The pressure to maintain dividend policy is substantial. So far, Shell has promised it would increase dividends ‘in line with inflation’ and BP has already signalled it will freeze its dividend. Austria’s OMV has already cut. Read more
Dmitry Medvedev, president of Russia, was in Finland this week where he unveiled proposals for a new legal framework for global energy cooperation.
Although Russia has been talking about a new energy treaty for months, European governments could still be forgiven for being a little surprised by the plans, a copy of which they are set to receive in the post.
After all, such a framework already exists – namely the Energy Charter Treaty, which was established after the fall of the Soviet Union to provide investment protection for western energy companies. Read more
Reuters is reporting the Asian oil premium is falling from $1 – $1.50 to below $1, and even going into reverse, as the big oil consumers there continue to grow, and increasingly source supplies from non-Opec countries:
Rarely officially discussed or acknowledged, the Asian oil premium has dwindled to an average of less than $1 per barrel over the past two years. Read more