Latest news with #OrganizationofPetroleumExportingCountries
Calgary Herald
3 days ago
- Business
- Calgary Herald
Varcoe: As Trump and OPEC leader come to Alberta, energy markets 'hanging on their words'
Article content Amid such turbulence, clarity remains in short order and is clouding investment decisions. Article content That's why energy experts will closely scrutinize next month's visits, including the speech in Calgary by Al Ghais, a former Kuwaiti governor to the Organization of Petroleum Exporting Countries. Article content 'It doesn't really seem like the market is exactly sure what to make of what OPEC is doing right now, (with) a lot of contradictory signals and a lot of confusion,' Rory Johnston, founder of the Commodity Context newsletter, said Thursday. Article content 'Anytime the secretary general speaks over the next little while, the market is watching to try to figure out what all this means. Obviously, for a Canadian audience, that is especially acute given the fact that we like high prices here.' Article content Oil is Canada's largest export item, but high prices have been missing since March, when WTI crude hovered near US$72 a barrel. Many analysts expect weak prices will continue through 2025 and into next year. Article content Article content The tandem of U.S. 'reciprocal tariffs' unveiled against other countries on April 2 and OPEC+ agreeing to increase its oil supply led to a sharp drop in prices through much of the spring. On Thursday, WTI crude closed at US$60.90 a barrel, down 90 cents on the day. Article content The provincial government is projecting oil prices will average $68 a barrel for its fiscal year, potentially creating a massive revenue shortfall for the province if tepid prices continue. Article content Rystad Energy is forecasting benchmark U.S. oil prices will average $66 a barrel for this year, and $69 next year, if OPEC+ take steps to cut supply to support markets, as it has done in the past. Article content However, if the cartel and its allies don't take such action, WTI crude prices could be in the mid US$50-a-barrel range next year, said Bell. Article content 'Without OPEC coming back in to manage the market later on in this year, we do run the risk of being in a fairly low crude oil price environment,' Bell said. Article content Article content 'There is a little bit of upside on WTI prices for the summer months, but I think over the rest of 2025, we're going to be in that low $60s range, which does make it challenging from an Alberta budget perspective.' Article content During a presentation at a conference Wednesday, she noted oil markets are facing structural changes from a shifting world order, with U.S. tariffs at a level not seen in decades. Article content Rystad has cut expected global oil demand this year by 400,000 barrels per day because of the direct impact of tariffs. Article content In Canada, however, some of the hit will be offset by a smaller discount facing heavy oil. Article content The price differential between WTI and Western Canadian Select heavy oil has narrowed to about $10 a barrel with the startup of the Trans Mountain pipeline expansion, which has opened up new markets for producers.
Calgary Herald
3 days ago
- Business
- Calgary Herald
Varcoe: As Trump and OPEC come to Alberta, energy markets 'hanging on their words'
Article content Amid such turbulence, clarity remains in short order and is clouding investment decisions. Article content That's why energy experts will closely scrutinize next month's visits, including the speech in Calgary by Al Ghais, a former Kuwaiti governor to the Organization of Petroleum Exporting Countries. Article content Article content 'It doesn't really seem like the market is exactly sure what to make of what OPEC is doing right now, (with) a lot of contradictory signals and a lot of confusion,' Rory Johnston, founder of the Commodity Context newsletter, said Thursday. Article content 'Anytime the secretary general speaks over the next little while, the market is watching to try to figure out what all this means. Obviously, for a Canadian audience, that is especially acute given the fact that we like high prices here.' Article content Oil is Canada's largest export item, but high prices have been missing since March, when WTI crude hovered near US$72 a barrel. Many analysts expect weak prices will continue through 2025 and into next year. Article content Article content The tandem of U.S. 'reciprocal tariffs' unveiled against other countries on April 2 and OPEC+ agreeing to increase its oil supply led to a sharp drop in prices through much of the spring. On Thursday, WTI crude closed at US$60.90 a barrel, down 90 cents on the day. Article content The provincial government is projecting oil prices will average $68 a barrel for its fiscal year, potentially creating a massive revenue shortfall for the province if tepid prices continue. Article content Rystad Energy is forecasting benchmark U.S. oil prices will average $66 a barrel for this year, and $69 next year, if OPEC+ take steps to cut supply to support markets, as it has done in the past. Article content However, if the cartel and its allies don't take such action, WTI crude prices could be in the mid US$50-a-barrel range next year, said Bell. Article content 'Without OPEC coming back in to manage the market later on in this year, we do run the risk of being in a fairly low crude oil price environment,' Bell said. Article content Article content 'There is a little bit of upside on WTI prices for the summer months, but I think over the rest of 2025, we're going to be in that low $60s range, which does make it challenging from an Alberta budget perspective.' Article content During a presentation at a conference Wednesday, she noted oil markets are facing structural changes from a shifting world order, with U.S. tariffs at a level not seen in decades. Article content Rystad has cut expected global oil demand this year by 400,000 barrels per day because of the direct impact of tariffs. Article content In Canada, however, some of the hit will be offset by a smaller discount facing heavy oil. Article content The price differential between WTI and Western Canadian Select heavy oil has narrowed to about $10 a barrel with the startup of the Trans Mountain pipeline expansion, which has opened up new markets for producers. Article content Meanwhile, the outlook for natural gas producers in Western Canada is looking up with the impending startup of LNG Canada, which will export about 1.8 billion cubic feet (bcf) per day to customers in Asia.
The Star
06-05-2025
- Business
- The Star
Wall Street's ‘fever dream' may still end in cold sweats for investors
Wall Street's recent rebound from its April lows suggests equity investors are pricing in a benign outlook for the US economy, which contrasts starkly with the more ominous signals coming from the oil, gold and fixed income markets. Is this justified confidence, or dangerous complacency? If you had turned off all communications on April 2 and logged back on today, you would find the S&P 500 roughly unchanged, with no sign of the 15% slump suffered in the days immediately following President Donald Trump's April 2 tariffs announcement. The S&P 500 has risen nine days in a row through May 2, its best daily winning streak in 21 years. Meanwhile, the 'S&P 493' – the broad index excluding the 'Magnificent Seven' tech megacaps – is flat for the year to date, also remarkable given the tumult over the past four months. Contrast that with other markets. Oil last Friday had its lowest close in four years and is down 25% on a year-on-year basis. While this partly reflects calls for accelerated output hikes by the Organization of Petroleum Exporting Countries, the macroeconomic signals flashing here are pretty clear: weak demand, sluggish growth and disinflation. Gold, meanwhile, is up 25% this year and still above its 'Liberation Day' close, despite drifting down from its recent record high of US$3,500 an ounce. While this is not an indication of heightened disinflation fear, it is a sign of elevated fear overall. Bullion's allure as the world's premier safe-haven asset has rarely been stronger. And what of US Treasuries? The two-year yield has rebounded in recent days but is still 40 basis points lower this year, and rates traders are still anticipating at least three quarter point cuts from the US Federal Reserve this year. Both are pricing in a meaningful slowdown. Is this simply an example of the old adage that equity investors are paid to be optimistic while bond investors are paid to be pessimistic? Perhaps, but there is some justification for Wall Street's optimism. It's largely rooted in the view that the economic damage inflicted by tariffs won't be as bad as feared a few weeks ago, partly because the Trump administration has backpedalled in the face of market ructions. In other words, the 'Trump put' is back. Investors also have reason not to be too worried about the 0.3% gross domestic product (GDP) contraction in the first quarter, as it largely reflects the front-loading of imports, a statistical anomaly that will be quickly reversed. It was a 'gross distorted product', according to Goldman Sachs economists, who anticipate a 2.4% GDP expansion in the second quarter. Moreover, while 'soft' economic data like consumer sentiment indicators continue to flash red, much of the 'hard' data, like employment figures, is holding up well. And even if real growth this year is only 0.5% – Goldman's estimate, which is at the lower end of forecasts – that still implies nominal growth of close to 5%, if inflation tops 4%, as many economists expect. Importantly, earnings are driven by nominal growth rates. While first quarter earnings are obviously 'rear-view mirror' numbers in the context of the trade war, around 74% of the 357 companies in the S&P 500 that have reported so far have beaten estimates, according to LSEG's Tajinder Dhillon. This compares to a long-term average of 67%. And the 12-month forward growth expectations for the S&P 500 are still running at a punchy 10%. But that's not the whole story. Many firms have slashed forecasts or declined to give any guidance at all. Even though Trump seems very likely to dial down his initial tariff numbers, the cost of doing international business is still going to rise significantly. Whether that cost is borne more by businesses or consumers remains to be seen, but in the broader context of economic activity and corporate profitability, the effect will be the same. Tariffs haven't bitten yet, but they will. In an interview with Bloomberg TV last Friday, Gene Seroka, executive director of the Los Angeles port – the biggest in the country – pulled no punches: 'Chief executives are telling me, 'hit the pause button'. 'Hiring, off the table for right now. Capital investment, pause. And the retailers are telling me that even 10% (tariffs), 'I'm going to have to pass it on to the consumers'.' Bob Elliott, chief executive at Unlimited Funds, reckons equities are priced as if the last month was a 'fever dream'. The risk is that investors break out in cold sweats in the months ahead. — Reuters Jamie McGeever is a columnist for Reuters. The views expressed here are the writer's own.
Yahoo
30-04-2025
- Business
- Yahoo
Oil prices post biggest monthly drop since 2021 as trade war sparks recession, demand fears
Crude oil prices capped their worst monthly drop since November 2021 as fears over a global economic downturn and demand shock as a result of tariffs come as the supply of oil is about to surge. West Texas Intermediate (CL=F) futures fell more than on Wednesday to settle at $58.21 a barrel, while Brent crude (BZ=F), the international benchmark, also dropped to close at $63.12. Oil prices sank to session lows after a Reuters report indicated OPEC leader Saudi Arabia, is willing to live with lower prices for a prolonged period, hinting a faster unwind of production cuts in order to expand market share. WTI crude oil prices have lost roughly 16% this month, while Brent crude has dropped closer to 17%. Wednesday's drop followed data that showed the US economy contracted in the first quarter for the first time in three years. Labor market data also showed slower hiring in the US than forecast, a signal that tariffs may be weighing on economic growth. Read more: What Trump's tariffs mean for the economy and your wallet These reports followed data out of China this week that showed factory activity in the country contracting at the fastest rate in over a year, stoking further worries that the US-China trade spat will hurt growth and, in turn, global oil demand. China is the world's largest crude oil importer. An hike in supply is also expected next month from the Organization of Petroleum Exporting Countries and its allies (OPEC+) led by Saudi Arabia. A recent report from Reuters suggested that another increase in production is being contemplated to take effect in June. The S&P 500 (^GSPC) has been in recovery mode in recent weeks, recovering some of its steep early April declines amid an optimistic tone from Trump officials on tariff reprieves and potential deals. Oil prices, however, have not seen the kind of support from investors enjoyed by stocks during a moderating of trade tensions through April. "While the recent de-escalation in trade talks has certainly reduced the probability of a bear case, that doesn't imply that the 'Trump put' extends over the energy sector, as President Trump and his aides continue to pursue lower oil and gasoline prices — as low as $50 per barrel," wrote JPMorgan's Natasha Kaneva and her team on Tuesday. On the demand side, "the markets may be underestimating the final tariff levels that the Trump administration plans to impose on US imports," said Kaneva. On the consumer side, gas prices have actually risen over the month of April amid increased demand and better weather across much of the country. Data from AAA showed the average per-gallon cost of regular gas stood at $3.18 as of Wednesday, up from $3.16 a month ago. Still, these prices are down sharply from last year, when the price of a regular gallon of gas stood at $3.66. Ines Ferre is a Senior Business Reporter for Yahoo Finance. Follow her on X at @ines_ferre. Click here for in-depth analysis of the latest stock market news and events moving stock prices Sign in to access your portfolio
Yahoo
30-04-2025
- Business
- Yahoo
Oil prices on track for biggest monthly drop since 2021 as trade war sparks recession, demand fears
Crude oil prices are headed for their worst monthly drop since 2021 as fears over a global economic downturn and demand shock as a result of tariffs come as the supply of oil is about to surge. West Texas Intermediate (CL=F) crude oil prices, the US benchmark, were down over 3.5% on Wednesday to trade as low as $58.20 a barrel, while Brent crude (BZ=F), the international benchmark, also fell over 3.5% to as low as $60.93 a barrel. WTI crude oil prices have lost over 16% this month, while Brent crude has dropped closer to 17%, the largest monthly decline since November 2021. Wednesday's drop followed data out early Wednesday that showed the US economy contracted in the first quarter for the first time in three years. Labor market data also showed slower hiring in the US than forecast, a signal that tariffs may be weighing on economic growth. Read more: What Trump's tariffs mean for the economy and your wallet These reports followed data out of China this week that showed factory activity in the country contracting at the fastest rate in over a year, stoking further worries that the US-China trade spat will hurt growth and, in turn, global oil demand. China is the world's largest crude oil importer. An increase in supply is also expected next month from the Organization of Petroleum Exporting Countries and its allies (OPEC+), putting pressure on prices. A report from Reuters suggested that another increase in production is being contemplated to take effect in June. The S&P 500 (^GSPC) has been in recovery mode in recent weeks, recovering some of its steep early April declines amid an optimistic tone from Trump officials on tariff reprieves and potential deals. Oil prices, however, have not seen the kind of support from investors enjoyed by stocks during a moderating of trade tensions through April. "While the recent de-escalation in trade talks has certainly reduced the probability of a bear case, that doesn't imply that the 'Trump put' extends over the energy sector, as President Trump and his aides continue to pursue lower oil and gasoline prices — as low as $50 per barrel," wrote JPMorgan's Natasha Kaneva and her team on Tuesday. On the demand side, "the markets may be underestimating the final tariff levels that the Trump administration plans to impose on US imports," said Kaneva. On the consumer side, gas prices have actually risen over the month of April amid increased demand and better weather across much of the country. Data from AAA showed the average per-gallon cost of regular gas stood at $3.18 as of Wednesday, up from $3.16 a month ago. Still, these prices are down sharply from last year, when the price of a regular gallon of gas stood at $3.66. Ines Ferre is a Senior Business Reporter for Yahoo Finance. Follow her on X at @ines_ferre. Click here for in-depth analysis of the latest stock market news and events moving stock prices Sign in to access your portfolio
