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Goldman says oil’s rebalancing remains fragile amid macro headwinds
A natural gas flare on an oil well pad burns as the sun sets outside Watford City, North Dakota January 21, 2016. Oil’s recovering fundamentals remain fragile, with many global factors offsetting each other, leaving a firmer U.S. dollar as the main driver of lower prices recently, Goldman Sachs said in a note this week. The Wall Street bank, which turned bullish on oil earlier this year, said oil prices will remain in a $45 a barrel to $50 a barrel trading range through mid-2017, with near-term risks skewed to the downside due to high inventory levels and the possibility of a stronger dollar. “Beyond these near-term uncertainties, however, our updated supply-demand balance is little changed and still points to a slow rebalancing of the global oil market over the coming year,” the U.S. bank said in a note dated Wednesday. Oil prices on Friday were hovering around April […]
Sinking Oil Prices Mean Fragile Unity for OPEC’s New Chief
Mohammed Barkindo becomes secretary general on August 1 OPEC at ‘critical time’ as cost of new strategy hits members When OPEC’s new chief starts next week, he’ll take over an organization that’s largely reconciled internal differences after a two-year fight over strategy. But as oil prices sink again, that unity could be at risk. Nigerian Mohammed Barkindo will be the first new top official at the Organization of Petroleum Exporting Countries in almost a decade. He comes to the role after a dispute over output policy split OPEC’s richest and poorest nations and marked the final months of his predecessor’s tenure. While members now back Saudi Arabia’s tactic of pumping without restraint to choke off supply from rivals such as U.S. shale drillers, many struggle with its effects. Oil’s 53 percent recovery since January hasn’t boosted prices enough to relieve the economic pain that pushed some members, notably Venezuela, […]
Aramco Buyer Beware: The Risky Track Record of Government Oil
Saudi Arabian Oil Co. has captured the oil industry’s attention with plans for an initial public offering that could raise more than $100 billion, but some investors are wary, pointing to the track records of other government-controlled energy companies. The plan to float as much as 5% of Aramco, the world’s largest oil company, has kicked off a scramble among banks for a role in a deal that could generate $1 billion in fees—the biggest investment-banking deal ever. The kingdom estimates the company has a value of between $2 trillion and $3 trillion. But several publicly listed, state-run oil firms have stumbled, demonstrating the hazards in investing in government-controlled companies. That highlights the dilemma that would-be Aramco investors could face: Would Aramco be accountable to shareholders or to the kingdom that still would own a stake of at least 95%? “Investing into a government-run entity, which acts as kind […]
Faltering Oil Rally Boosts Leveraged Loan Defaults, Fitch Says
Templar, Stallion likely to miss interest payments, Fitch says The defaults would push energy default rate to nearly 18% The default rate for leveraged loans in the energy sector could spike close to 18 percent if Templar Energy LLC and Stallion Oilfield Services Ltd. are unable to make interest payments on their debt, Fitch Ratings said. The companies will likely be forced to default on the loans in August, according to Fitch, as weak oil and gas markets leave them short on cash. The July trailing 12-month energy leveraged loan default rate rose to nearly 14 percent from 11.3 percent in June, Fitch said. Officials at Templar, an oil and gas exploration company, and Stallion, which provides drilling support, didn’t immediately respond to requests for comment. “The impact of commodity price pressures has been the largest driver of defaults in the leveraged loan market this year,” said Eric Rosenthal, […]
