UBS | US E&Ps cut capex by ~40% YoY in 2015 & are budgeted to cut >50% YoY this year. This has caused the US oil rig count to plunge from a peak of 1,609 in 2H14 to 328 (7- year low). But as spot WTI prices have moved from <$30/Bbl earlier this year to ~$46/Bbl currently, one of the key questions energy investors are asking is when will US E&Ps begin to add rigs?
BARCLAYS | New unplanned outages look unlikely to abate in the next couple of months, which have contributed to a tighter 1H16 oil market balance and new variability in the price forecast.
The drop in oil prices and the belief – rarely justified by experience – that things will never be what they were, have begun to set off alarm bells in some of the major sporting activities. These have provided an amazing bounty of triumphs thanks to Repsol’s generous patronage.
BARCLAYS | Despite the recent firming in oil prices, crude remains firmly below the level that we would consider being conducive to additional investment. As such spending continues to come under pressure, with our recently published upstream spending survey showing that companies have revised down budgets by a further 15% since January.
Julius Baer Research | Oil seemingly maintains last week’s positive momentum and prices continue to rally in early Monday morning trade. There was indeed a set of supportive news pushing Brent benchmark prices close to USD 40 per barrel.
There are apparently two imminent threats to the world economy which is the reason why the markets have tumbled: the damage low crude prices could cause for investments in the oil sector and the global financial system, and the fact the fall in oil prices may reflect the sharp slowdown in China. But both of these issues seem cloudy.
UBS | The distaste for value is back to the ‘growth love – in’ high of 2000. The valuation stretch between winners & losers (within a sector) has only been this high 4 times since 2000: 1) end of Tech bubble; 2) Mar 03 recession; 3) Mar 09 Financial crisis; and 4) Jul 12 ‘euro panic’.
UBS | The current global growth scare, which has recently focused on the US, has set off a train of events that, rather implausibly, is leading to modest outperformance by EM (v. DM) equities in down markets so far this year. We explain this very simply; worries over the US economy have pulled the dollar lower and have, for now, taken some, much – needed, currency pressure off EM equity markets.
Low oil prices can be good for the drivers, but they are simply catastrophic for the oil companies and the markets. Many top oil firms have seen their earnings sharply reduced and their credit ratings cut. It is expected that prices will rise again, but not before late this year or 2017. The big question is whether the industry will be able to survive until then.
Atlantic Sentinel | Year 2003 was a different era. The US waged a war of choice in Iraq; Vladimir Putin’s Russia was seen as a paper tiger; China’s economic boom roared but didn’t threaten; Dubai was unknown; and the United States seemed like it would forever be an oil importer. Much has changed.