Intermoney| On the oil front, news from Iraq. According to the country’s oil minister, Iraq, OPEC’s second largest producer, is meeting its production quota under the OPEC+ agreement that limits production to prop up the market. Iraq has capped production at 4 million bpd while exports are around 3.4 million bpd. Iraq is OPEC+’s second largest producer, but has a history of irregularity in meeting its quota with the cartel,…
The oil company’s idea is to maintain the operation of its service stations and monetise these facilities through a long-term agreement with an investor who would become their lessor, according to several financial sources consulted by La Información. The group chaired in Spain by Andrés Guevara de la Vega has consolidated a network of around 750 petrol stations throughout the country. Since its arrival in Spain in 1954, the company…
Alphavalue | Against growing environmental constraints, as well as an uncertain perspective on hydrocarbons, oil companies are modifying their strategy. The electrification of the energy mix appears as an opportunity for the mutation to integrated energy companies. The big oil companies want to be a part of the growing market of renewable energies, but they will compete against the powerful utilities.
Brent crude oil is trading at $36 a barrel, down 20%, after OPEC and Russia broke off negotiations on Friday to try and cut the supply by 1.5 million barrels a day. At these levels, it completely breaks through the level indicated by the sector as break even, namely 45-55 dollars. Banco Sabadell analyses the sensitivity of the stocks they cover to variations in crude prices: Repsol, Total and ENI.
Alphavalue | The pressure on the oil industry to paint itself in green appears to be growing by the day and its strategic corner even more acute. It is remarkable and probably unique for such a powerful sector (nearly €700bn in market cap) to find itself under such powerful negative lime-lights in such a short period of time
Renta 4 | Spanish oil company Repsol published its operational data for Q119. In the first quarter of the year, the price of Brent Crude (63.1$/b) fell -5% yoy and -8% compared to Q418 because of the strong reduction in crude prices since their highs at the beginning of October (-42% until the end of December, although with a subsequent recovery of +28% from the beginning of 2019 until the end of March).
For any investor who believes that $70/barrel is more or less the right price, then the European oil firms are currently fairly priced. Alphavalue recently upped their earnings forecasts to include $70/barrel as a new normality. This leaves the sector with an upside potential of +6% on a 6-month horizon.
One of the most objective measures for judging whether the stock market is expensive or cheap is the dividend yield. At the moment, the main global stock markets offer real returns which are superior to those of long-term sovereign bonds. For example, 34 of the 40 biggest French firms, those which make up the CAC40, have increased dividends over the last year.
Citi’s research analysts targets two significant issues on this recent decline: disinflation pressures and what would happen if oil prices don’t recover.
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.