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Oil, euro fall on Greek debt talks

Forex-Master — Mon, 23 Jan 2012 12:49:02 +0000

Oil fell for a fourth day, the euro weakened and U.S. equity futures slid after Greek bondholders said theyve made their maximum offer in negotiations to prevent the country from defaulting.

Oil lost 0.3 percent to $98.03 a barrel as of 11:54 a.m. in Tokyo. The euro fell 0.3 percent to $1.2898,…
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Published: Mon, 23 Jan 2012 13:49

Exports Rise But Trade Deficit Widens – US-FOREX.US

Forex-Publisher — Wed, 12 Aug 2009 17:47:00 +0000

U.S. exports are on the rebound, but rising oil prices widened the trade deficit in June.”The global business cycle is in a state of repair and that involves trade building itself back up, even if it means a modest widening of the deficit,” said Steven Wieting, chief U.S. economist at Citigroup. The trade deficit widened in June to negative 27 billion, from negative 26 billion in May, due to rising oil prices lifting imports for the first time in nearly a year, according to the Commerce Department. Meanwhile, despite the increase in the nominal deficit, real balance of goods tightened to negative 35.6 billion, from 36.3 billion, maintaining a trend that began in 2006.Exports increased 2.0% June, after a 1.6% increase in May. The jump kept the deficit from stretching to negative 28.5 billion, which Wall Street had expected, and was led by foreign demand for industrial supplies and materials, and capital goods. This is good news for the economy, which has seen that metric drag over the past year. “The rise in exports – the second straight monthly increase – can be viewed as a positive comment on the beginning recovery in world trade,” said Vincent Farrell chief investment officer of Soleil Securities in a note to clients Wednesday.Export growth was outmatched by the 2.3% rise in imports, as petro imports increased by nearly a quarter during June, yet about three-fourths of the jump was due to higher prices. The cost of energy dropped in July though, which will probably lead to a decline in imports during the month. Since January, the Energy Select Sector SPDR
exchange-traded fund rose 6.6%.Growth in activity in both directions is indicative of a rebound in global trade, though Wieting noted that the trade sector had recently ground to a halt. Global trade is strikingly short of what it was even a year ago. For example, the trade gap for the first half 2009 totaled nearly 173 billion, which is more than 50% lower than last year’s corresponding period. At the current pace, the U.S. trade deficit for the entirety of 2009 will be the lowest since 265 billion in 1999.
Abiel Reinhart, an economist at JPMorgan Chase, expects exports to continue to grow in the months ahead as global economic activity turns positive, adding that non-petroleum imports should also rebound soon because of rising domestic demand. It’s difficult to see domestic demand go anywhere but up, as imports of consumer products fell to the lowest since November 2005.

Oils Bleak Outlook – US-FOREX.US

Forex-Publisher — Wed, 12 Aug 2009 15:46:41 +0000

Are the oil bulls vindicated? The Paris-based International Energy Agency was the latest barrel counter to raise global demand forecasts for 2009 and 2010 on Wednesday, to 83.9 million barrels a day this year and 85.3 million barrels a day next year. Although these followed more bearish predictions for 2009 from the United States’ Energy Information Administration and the Organization of Petroleum-Exporting Countries, all three institutions see demand in 2010 increasing by 500,000 to 900,000 barrels per day.A real rebound in demand might be further off than expected, however. The IEA cited improved demand from China-and other countries outside of the Organization for Economic Cooperation and Development-as the main reason for hiking its forecasts, with Chinese demand expected to grow by 2.8% this year and 4% this year. But even though China’s economy is growing at a relatively healthy rate, especially when compared with the shrinking economies of the West, there are doubts over whether a true “decoupling” can succeed for the export-driven country.”I wonder, with developed economies not consuming, where all those goods that those developing economies make are going to be sold to,” said Simon Wardell, an analyst with IHS Global Insight. He said that the IEA’s expectations for 2010 looked “a little high,” and expected forecasts to be cut down the line.Oil prices firmed up slightly during afternoon trading in Europe, with Brent crude up 81 cents, to 72.85 per barrel, while West Texas Intermediate oil rose 40 cents, to 69.85 per barrel. Analysts think oil is overvalued relative to the fundamentals of the oil market, with persistently weak demand and high inventories pointing to strong potential for a price correction; at the same time, however, speculative investors are giving oil prices support by betting on economic recovery in tandem with other financial markets.”The overall picture is quite bleak,” said Eugen Weinberg, an analyst with Commerzbank. He said that even though Chinese demand could still turn out to be surprisingly positive, whether driven by short-term re-stocking or long-term factors, there was still a lot of uncertainty going into 2010. Oil inventories were still high, which would in normal times require a cut in supplies from OPEC, but Weinberg said the cartel would face a big blow to its credibility if it was forced to make such an about-face.

Sunocos Slow Quarter – US-FOREX.US

Forex-Publisher — Tue, 04 Aug 2009 22:46:09 +0000

Analysts don’t expect much from Sunoco this quarter.Profit weakness plaguing all U.S. refiners stemming from gasoline overproduction, recessionary summer demand and brimming inventories has already been priced into shares. According to Citi analyst Faisel Khan, these factors have pulled the sector down roughly 30% this year. But while Khan’s expectations that the sector’s second- and third-quarter earnings will be “nothing short of abysmal” have proved correct thus far, analysts advise against fleeing the sector just yet. “Refining earnings do not remain negative for very long,” Khan said. As soon as demand returns, margin pressures will lift as excess inventory is worked off.Until then, refiners-much like nearly every other industry-are focused on cutting costs. Refining and chemicals company Sunoco
, which reports second-quarter results on Wednesday, aims to reduce costs by 300 million this year because it anticipates a challenging market for petroleum and chemical products through 2009. When the Philadelphia-based company reported first-quarter results in early May, it slashed its capital spending budget by 200 million as it deferred construction on its Middletown, Ohio cokemaking plant.Investors will be looking to see how well Sunoco has managed costs throughout the quarter and whether management sees any improvement to the company’s outlook. Analysts polled by Thomson Reuters are projecting a loss of 12 cents a share and a year-end profit of 1.69 a share.
Barclays Capital analyst Paul Cheng anticipates a refining loss of 43 million, compared to the prior quarter’s profit of 23 million and 32 million a year ago. He expects production to be down by 13% year-over-year. Sunoco shares closed Tuesday’s trading session up by 34 cents, or 1.3%, at 25.93. The stock has lost roughly 40% since the beginning of the year.

Summer Wont Cure Big Oil Blues – US-FOREX.US

Forex-Publisher — Tue, 04 Aug 2009 10:46:10 +0000

Norway’s StatoilHydro was the latest oil major to report a slump in second-quarter earnings on Tuesday, with operating profits down 61% and net income at a clean zero. The 40%-50% slump in oil prices over the year has also depressed profitability at heavyweights like BP, Royal Dutch Shell and Total, and forced a cost-cutting drive across the industry. But with oil steadily rising past 70-71 per barrel, will summer bring some respite?The truth is, probably not. Although there is the possibility that stronger oil prices will offset some of the pain seen since summer 2008-when oil hit a high of 147.50 before sinking to below 70 by the end of September-actual demand for oil is not expected to post an annual rise until 2010. Then there’s the problem of natural gas prices, which lag oil by about six months, and are on the way down. On the other side of the balance, in “downstream” operations such as refining, the outlook is not much healthier. “Weak refining is also a drag on earnings,” said Gudmund Halle Isfeldt, an analyst with DnB Nor. He said that gasoline margins in the United States were currently at 15 per barrel, double where they were at the end of June, but that this was mainly driven by financial players and that they would fall again by October.Oil and gas stocks were down 0.8% across Europe on Tuesday morning, with StatoilHydro
down 0.6%, to 133.20 Norwegian kroner , in Oslo, while Royal Dutch Shell
and BP
slipped 0.4%-0.5% in London.StatoilHydro said its profits had taken a hit from lower oil and gas prices, currency volatility and “an unusually high” tax bill from foreign-exchange gains. The company’s net profits were wiped out to zero over the year, but stripping out the tax effects showed only a 48% drop in “adjusted” earnings, to 29.2 billion kroner . Production came in broadly as expected, at 1.7 million barrels per day.The firm kept its capital expenditure projection at 13.5 billion, with half of this figure earmarked for new projects. One-third of the total will go towards investment in existing assets. The aim is to reach annual production of 2 million barrels per day this year.

Big Oil Slick – US-FOREX.US

Forex-Publisher — Fri, 31 Jul 2009 13:46:04 +0000

Taking stock can sometimes lead to taking profit, especially for the oil industry. Total and Eni were the last of the big European majors to report quarterly earnings on Friday-with the exception of StatoilHydro-and the industry-wide pattern of slumping profits, falling production levels and crumbling refining margins were all on display. After a week of similarly lackluster results, investors headed for the exit.Oil and gas stocks were down 3% across Europe on Friday afternoon, and Eni
led the sector downwards with a share-price drop of 6.3%, to 16.58 euros , in Milan, after the company cut its dividend. Total
was down 2.9%, to 38.85 euros , in Paris, while Royal Dutch Shell
and BP
-which both reported results earlier this week-were down around 1% in London.The near-50% drop in oil prices over the year has led to similar falls in profit for big oil companies, as they struggle with a weaker demand environment and less profitable refining operations. Eni and Total’s earnings announcements still disappointed expectations, though: Italy’s Eni reported a 75.8% drop in profits, to 830 million euros , while Total’s profits were halved over the year, to 2.2 billion euros .”The refining segment of Total was very weak,” said Gudmund Halle Isfeldt, an analyst with DnB Nor. Operating income from Total’s refining, or “downstream,” operations came in 73% lower over the year, to 156 million euros . Total’s overall earnings before interest and tax of 2.9 billion euros came in some 8% below consensus forecasts.BP, Royal Dutch Shell and ExxonMobil
have all reported profit falls of 50%-70% this week. The atmosphere for the industry now is one of caution and cost-cutting as commodity demand remains weak. BP proved its mettle earlier in the week by raising its savings target for the year to 3 billion, from 2 billion, while Shell Chief Executive Peter Voser said more jobs were expected to go to help turn the company into a more efficient enterprise.
This has led to fears that the majors will have to squeeze dividend payouts. Eni announced a cut to its six-month dividend to 50 euro cents , from 65 euro cents , on Friday. Total said it was fully focused on cost-cutting efforts on Friday, but kept its dividend steady.

Shell CEOs Baptism Of Fire – US-FOREX.US

Forex-Publisher — Thu, 30 Jul 2009 09:46:00 +0000

It’s not easy taking the helm of a company in the midst of an industry slump, but that’s exactly what Peter Voser did a month ago at Royal Dutch Shell. And now the pressure is on for him to expand his cost-cutting drive, after the oil major announced a 70% drop in second-quarter profits on Thursday and said that demand remained “weak.” Shell is one month into Voser’s program, called “Transition 2009,” which has already claimed the scalp of 20% of senior management positions. The new CEO said on Thursday that this would be only the beginning, adding that “substantial” staff reductions were likely to follow. “We are not banking on a quick recovery,” said Voser. “We must do more.”More is clearly what investors will be pushing for. Shell said it had reduced operating costs by 700 million in the first six months of 2009, and is aiming to cut 2010 capital expenditure by over 10%, excluding currency volatility and one-offs. But rival BP
has already achieved an impressive 2 billion in cost savings for the first six months, and promised earlier this week an extra 1 billion in cuts for the rest of the year. Shares of Royal Dutch Shell
ticked up 0.1%, or 2 pence , to 15.90 pounds , during morning trading in London. BP was up 0.7%, while Total
was trading flat in Paris.”The new CEO means Shell will have a new momentum,” said Gudmund Halle Isfeldt, an analyst with DnB Nor, who rates the company a top pick along with BP and StatoilHydro. “There’s potential upside for an investor.”Shell said on Thursday that its second-quarter earnings, on a current cost of supplies basis, had fallen 70%, to 2.3 billion. This was mostly due to the drop in oil prices over the year, down some 50%, but Shell was also hurt by weak natural gas prices, weak refining margins and militant attacks on its operations in Nigeria. Shell’s production levels fell to 2.96 million barrels per day, whereas DnB Nor’s Isfeldt had expected 3.1 million.
But there was some good news at Shell’s marketing and trading division, which reported higher earnings from natural gas and power over the year. “It seems to be that basically the business-to-business trade, within marketing, was quite resilient,” said Isfeldt.

Exxon Chevron Next Up – US-FOREX.US

Forex-Publisher — Wed, 29 Jul 2009 21:45:59 +0000

Steep second-quarter profit declines aren’t over yet for the oil sector as Exxon Mobil reports second-quarter results on Thursday and Chevron releases its second-quarter report on Friday. By now the market is well-versed in the difficult year-over-year comparisons plaguing oil companies so far. During 2008′s second quarter crude oil traded at 125 a barrel, about twice this year’s prices. Refining margins have been hampered by high gasoline inventory levels and weak fuel prices. On Wednesday, integrated oil company Hess
posted an 89% second-quarter profit pitfall and ConocoPhillips
reported a 76% drop in second-quarter earnings on the heels of the 53% earnings slump posted on Tuesday by BP
. Despite deteriorated profits, results have largely met analysts’ lowered expectations for the sector.Analysts polled by Thomson Reuters expect Exxon Mobil
to report a second-quarter profit of 1.02 a share on sales of 71.3 billion on Thursday and Chevron
is projected to post earnings of 95 cents a share on sales of 33.4 billion. Ahead of the releases, both companies assured investors that dividends would remain intact with Chevron boosting its quarterly payout by 4.6% to 68 cents a share. Exxon retained its 42-cent quarterly dividend.Investors will be looking to see how the companies are using capital during the period of weak commodity prices.Shares across the oil sector closed Wednesday’s trading session lower as the U.S. energy department reported an unexpected increase in crude stocks, which rose 5.2 million barrels to 347.8 million barrels in the week ended July 24. Crude oil lost 3.88, or 5.8%, to settle Wednesday’s session at 63.35 a barrel. The Energy Select Sector
exchange-traded fund shed 1.17, or 2.3%, to close at 49.44. Exxon’s stock finished down by 1.54, or 2.1%, at 70.35 and Chevron closed Wednesday’s trading session 1.76 lower, or 2.6%, at 66.58.
Thomson Reuters contributed to this article.

Big Oil Aint What It Used To Be – US-FOREX.US

Forex-Publisher — Tue, 28 Jul 2009 09:46:03 +0000

A year ago, the world’s major oil companies were at the peak of a commodities boom-fueled by volatility in other areas of the financial marketplace-that had pushed up the price of black gold to nearly 150 per barrel. The recession put paid to that particular bubble, and on Tuesday BP revealed its second-quarter profits had halved over the year, to 3.1 billion, more or less in line with the 50% decline in oil prices over the year.Strangely enough, it wasn’t all doom and gloom in the earnings report, which actually came in ahead of estimates. Reported quarterly production was 4% higher than last year, at 4 million barrels a day, mostly helped by gas; the company said it had achieved its target of 2 billion in cost cuts by mid-2009; and it also maintained its dividend at 14 cents per share.But even BP
boss Tony Hayward was in a bearish mood, saying the firm saw “little evidence” of any demand growth in the near future. “[We] expect the recovery to be long and drawn out,” he said.Shares of BP slumped 1.6%, to 510.95 pence , during morning trading in London, while rival Royal Dutch Shell
ticked up 0.2% and Total
slipped 0.6%. The industry is in cost-cutting mode as it attempts to cope with the economic downturn: The International Energy Agency predicts global demand for oil will drop 2.9% this year, to 83.3 million barrels per day.DnB Nor analyst Gudmund Halle Isfeldt said BP had delivered a “straightforward set of numbers,” and recommended the stock as his top sector pick along with Royal Dutch Shell and StatoilHydro. Although Isfeldt said BP had suffered slightly in the quarter from a weak American gas market, he added the company’s increased cost-cutting guidance and decent refining margins made it “ahead of the curve” relative to competitors.BP was also positively singled out by Deutsche Bank analyst Lucas Herrmann earlier this month, though he listed weak demand, faltering gas markets, “collapsed” refining margins and feeble petrochemical profits as the drivers behind an expected 66% quarterly earnings drop for the industry.

Valero Energy Holds Up Amid Widespread Weakness – US-FOREX.US

Forex-Publisher — Mon, 27 Jul 2009 21:48:45 +0000

High gasoline inventory levels and pricing pressures have been hitting refiners during the second quarter as the market will see when Valero Energy reports results on Tuesday. “While gasoline cracks mostly improved quarter-over-quarter, very depressed distillate cracks and lower crude differentials have taken a heavy toll on refining profitability: almost all refiners are expected to lose money in 2009′s second quarter,” said Credit Suisse analyst Mark Flannery. “Benchmark refining margins so far in 2009′s third quarter have failed to show improvement over second-quarter levels,” Flannery said, adding, “At this rate, third-quarter earnings may turn out to be worse than second-quarter numbers.”Analysts polled by Thomson Reuters are expecting Valero Energy
to report a second-quarter loss of 50 cents a share on sales of 15.2 billion. The estimated loss is in line with the company’s own projection, provided in early June. Valero said second-quarter results were negatively affected by weak sour crude oil discounts, declining diesel margins and extended downtime at two of its refineries. The company also said that it planned to invest 2 billion in growth investments in 2009. Investors will be eager to hear management’s comments regarding the outlook for the industry as well as for the company. JPMorgan analyst Michael LaMotte holds a neutral rating on Valero because relative to other companies in its peer group, the risk of low demand is balanced by a solid financial position.”As a stock investment, Valero’s geographic diversity and the number of refineries in its system also reduce investors’ exposure to event risk,” LaMotte said in a note to clients last month.
Valero shares closed Monday’s trading session up by 46 cents, or 2.5%, at 18.77. Larger competitor ExxonMobil
reports earnings on Thursday and Chevron
reports Friday. Results from those super-majors will offer clues as to global demand expectations and about production capabilities in Western Africa. Oil trading on the NYMEX for delivery in February 2010 is 73.75 a barrel suggesting that commodities traders believe there will be a pickup in demand but only moderately so.