OPEC deal would encourage US shale producer rally

2016 ◽  
Keyword(s):  
Gulf Of Mexico ◽  
Oil Prices ◽  
Oil Price ◽  
Eagle Ford Shale ◽  
Eagle Ford ◽  
Content Type ◽  
Service Companies ◽  
West Texas ◽  
The Us ◽  
Shale Recovery

Significance The US shale industry has emerged from the worst of the crude price downturn battered, but also leaner and more efficient. Many shale producers are eager to return to growth, buoyed by a more stable oil price at around 50 dollars per barrel. However, oil prices need to rise somewhat higher still to give enough of a jolt to the industry to see US oil production return to meaningful growth. Impacts Oilfield service companies, especially fracking specialists, stand to gain if shale drilling activity picks up on the back of higher prices. The Permian shale in West Texas will lead any US shale recovery, due to its lower costs and large reserves, boosting the region’s economy. The Bakken and Eagle Ford shale plays will follow the Permian shale in a price recovery. Prices above 70 dollars per barrel would probably be required for investment to return to Gulf of Mexico deepwater projects.

Exploring the inflationary effect of oil price in the US

2019 ◽  
Vol 13 (1) ◽  
pp. 60-76 ◽  
Author(s):  
Amine Lahiani
Keyword(s):  
Growth Rate ◽  
Structural Breaks ◽  
Oil Prices ◽  
Oil Price ◽  
Inflation Expectations ◽  
Oil Price Shocks ◽  
Price Shocks ◽  
Content Type ◽  
The Us ◽  
The Relationship

PurposeThe purpose of this paper is to explore the effect of oil price shocks on the US Consumer Price Index over the monthly period from 1876:01 to 2014:04.Design/methodology/approachThe author uses the Bai and Perron (2003) structural break test to split the data sample into sub-periods delimited by the computed break dates. Afterwards, the author uses the quantile treatment effects over the full sample and then, by including sub-periods dummies to accommodate the selected structural breaks that drive the relationship between inflation and oil price growth.FindingsThe findings include a decreased transmission effect of oil price changes on inflation in recent years; a varied elasticity of inflation to the growth rate of oil prices across the distribution; and, finally, evidence of asymmetry in the relationship between the growth rate of oil prices and inflation, with a higher transmission mechanism for decreasing rather than increasing oil prices.Practical implicationsPolicymakers should remain alert to monitoring potential inflation increases and should take precautionary measures to anchor inflation expectations, because inflation reacts differently to positive and negative oil price shocks. Moreover, authorities should consider the asymmetric reaction of inflation to oil price shocks to adopt an appropriate monetary policy strategy to achieve the price stability target.Originality/valueThe paper used a quantile regression model with structural breaks, which has not yet been used in the literature.

US consumption may start to pick up

2015 ◽  
Keyword(s):  
Trade Balance ◽  
Oil Prices ◽  
Energy Prices ◽  
Trust Fund ◽  
Content Type ◽  
Consumption Expenditures ◽  
Us Economy ◽  
West Texas ◽  
Personal Consumption ◽  
The Us

Significance One of the conundrums of the US economy that will influence the Federal Reserve's timing of an interest rate rise (currently projected for September) is where the savings from low energy prices have gone. Oil prices have dropped sharply since September 2014, from 97 dollars per barrel for West Texas Intermediate in June 2014 to 60 dollars per barrel today. Yet US personal consumption expenditures (PCE) only grew by 2.7%, well below the rate of growth of personal income, 4.1%. Impacts Greater spending on petrol will help the Highway Trust Fund slightly, but not before a new funding package is due by July 31. Low oil prices will outweigh consumer savings in such producing states as Texas and North Dakota. Greater consumer spending will adversely affect the US trade balance, as imports will rise due to the strong dollar.

Oil prices are likely to stay high to the end of 2018

2018 ◽  
Keyword(s):  
Crude Oil ◽  
Emerging Market ◽  
Oil Prices ◽  
Oil Price ◽  
Wide Spread ◽  
Content Type ◽  
West Texas ◽  
Oil Exports ◽  
Market Expectations

Subject Outlook for the oil price. Significance OPEC’s decision not to raise production ahead of the re-imposition of US sanctions on Iranian oil exports in November has caused oil prices and market expectations to jump. Impacts US sanctions on Iranian exports are likely to cut global supply by up to 1.5 million barrels per day, twice the forecast earlier in 2018. The wide spread between the Brent and West Texas Intermediate (WTI) grades of crude oil will make US refining exports more competitive. Higher oil prices will raise prices and damage budget and trade balances in emerging-market net importers -- adding to mounting risks.

Price stabilisation will encourage US shale sector M&A

2016 ◽  
Keyword(s):  
Large Scale ◽  
Oil Prices ◽  
Oil Industry ◽  
Short Cycle ◽  
Content Type ◽  
Service Companies ◽  
Price Stabilisation ◽  
The Us ◽  
Increased Activity

Significance The current oil industry downturn has not led to the same sort of industry mega-mergers that previous down cycles have produced. However, as oil prices stabilise at 45-50 dollars per barrel and a return to 30-dollar oil looks less likely, the strongest US shale producers are initiating deals that position them to take advantage of the price recovery. Impacts Despite the broader industry downturn, the US shale sector remains an attractive long-term investment for many investors. Large-scale megaprojects are likely to fall out of favour as companies shift spending to smaller short-cycle investments, such as shale. Oilfield service companies will benefit from increased activity as stronger companies buy up weaker drillers.

Comments: Oilfield Services Face Low and Slow Recovery

2020 ◽  
Vol 72 (12) ◽  
pp. 10-10
Author(s):  
Pam Boschee
Keyword(s):  
Capital Investment ◽  
Technical Committee ◽  
Service Companies ◽  
Drilling Rig ◽  
Well Completion ◽  
Market Responses ◽  
West Texas ◽  
Fuel Demand ◽  
The Us ◽  
Capital Spending

OPEC’s easing of production cuts originally planned for January may be delayed until mid-2021 because of the global increases in COVID-19 cases occurring in November. As restrictions are renewed, extended, or newly instated, fuel demand is expected to decrease. Following a Joint Technical Committee (JTC) meeting on 16 November, OPEC Secretary General Mohammed Sanusi Barkindo underscored the need to remain “vigilant and diligent” in the months ahead. The JTC recommended that supply increases be postponed from 3 to 6 months. The OPEC ministers plan to hold an online meeting on 30 November to decide on production levels among the 13 member countries. By the time you read this in early December, their decisions - and the market responses to them - will be evident. Approximately 7.7 million B/D, or about 8% of global production, are currently tamped down. The recent encouraging announcements of two vaccines’ effectiveness in early clinical trials buoyed oil prices, which are hovering around $40/bbl (West Texas Intermediate closed at $41.38 on 16 November). The past 8 months brought with them upheavals in operators’ and service companies’ short-term reactions to market conditions based on their financial resiliency, and as the pandemic persists, the fallout sputters on as layoffs, bankruptcy filings, mergers and acquisitions, and new collaborative business deals arise almost daily. One sector thought to have bottomed out globally is oilfield services (OFS) and drilling, according to Moody’s Investors Service’s outlook published 13 November. Improvement in earnings is expected to be slow in 2021 as a result of the limited growth forecast in development activities and capital investment. Low and slow growth may be the sector’s motto for some time. The record lows in the third quarter of this year in the drilling rig count and well completion/servicing activity hit the OFS hard after operators reined in capital spending. Some recovery in the US has occurred since August when the rig count tanked at 244. By late October, it neared 300. The international rig count drop has slowed and reached fewer than 700 by later October. Moody’s reported the decrease will continue, but at a slower rate, through the end of this year.

The macroeconomic effects of increase and decrease in oil prices: evidences of asymmetric effects from India

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Anver Chittangadan Sadath ◽  
Rajesh Herolli Acharya
Keyword(s):  
Negative Impact ◽  
Wholesale Price ◽  
Oil Prices ◽  
Petroleum Products ◽  
Oil Price ◽  
Content Type ◽  
Macroeconomic Variables ◽  
Real Gdp ◽  
Oil Price Shock ◽  
Price Shock

Purpose The purpose of this paper is to assess whether oil price shocks emanating from oil price increase and decrease have a different impact on the macroeconomic activity. Design/methodology/approach This study conducts the empirical analysis using structural vector auto-regressive model on Indian data for the period from 1996 to 2017. This paper uses four key macroeconomic variables, namely, real gross domestic product (GDP), the real rate of interest, real money supply, wholesale price index inflation and various linear and non-linear measures of oil price shock. Findings Empirical results confirm that oil price shock has a significant impact on various macroeconomic variables used in the study. Specifically, shocks emanating from a decline in oil price have a stronger positive impact on real GDP, whereas, a shock due to the rise in oil price has a weaker negative impact on real GDP. Impulse responses confirm that shocks due to a decline in oil prices are long-lasting compared to similar shocks due to a rise in oil prices. Therefore, this study concludes that the macroeconomic impact of oil price shock is asymmetric in India. Originality/value This paper adds the following new insights: First, this paper presents a distinct relationship between the growth rate of oil price and GDP during increasing and decreasing phases of oil price to drive home the case for this study. Second, India has adopted crucial administrative initiatives such as deregulation of the market for petroleum products and the promotion of renewable energy during the study period. Finally, previous studies have revealed specific behavioral and economic features of people in India with respect to the demand for petroleum products. In light of these factors, this paper based on Indian experience would be justified.

The optimal thermal causal path analysis on the relationship between international crude oil price and stock market

Kybernetes ◽  
2018 ◽  
Vol 47 (6) ◽  
pp. 1242-1261 ◽  
Author(s):  
Can Zhong Yao ◽  
Peng Cheng Kuang ◽  
Ji Nan Lin
Keyword(s):  
Stock Market ◽  
Crude Oil ◽  
Stock Markets ◽  
Oil Prices ◽  
Oil Price ◽  
Chinese Stock Market ◽  
Crude Oil Price ◽  
Content Type ◽  
Crude Oil Prices ◽  
Causal Path

Purpose The purpose of this study is to reveal the lead–lag structure between international crude oil price and stock markets. Design/methodology/approach The methods used for this study are as follows: empirical mode decomposition; shift-window-based Pearson coefficient and thermal causal path method. Findings The fluctuation characteristic of Chinese stock market before 2010 is very similar to international crude oil prices. After 2010, their fluctuation patterns are significantly different from each other. The two stock markets significantly led international crude oil prices, revealing varying lead–lag orders among stock markets. During 2000 and 2004, the stock markets significantly led international crude oil prices but they are less distinct from the lead–lag orders. After 2004, the effects changed so that the leading effect of Shanghai composite index remains no longer significant, and after 2012, S&P index just significantly lagged behind the international crude oil prices. Originality/value China and the US stock markets develop different pattens to handle the crude oil prices fluctuation after finance crisis in 1998.

Oil prices and bank credit risk in MENA countries after the 2008 financial crisis

2020 ◽  
Vol 13 (2) ◽  
pp. 219-247
Author(s):  
Rui Wang ◽  
Hang (Robin) Luo
Keyword(s):  
Credit Risk ◽  
Deposit Insurance ◽  
Oil Prices ◽  
Oil Price ◽  
Bank Loan ◽  
Bank Credit ◽  
Bank Risk ◽  
Content Type ◽  
Mena Countries ◽  
Macroprudential Policies

Purpose The purpose of this paper is to investigate the oil price–bank risk nexus by considering the heterogeneity of bank characters. Design/methodology/approach This paper empirically tests the effect of oil price movements on bank credit risk by using a sample of 279 banks in the Middle East and North Africa countries from 2011 to 2017. Findings Authors find robust evidence that the credit risk of bank loan portfolios is negatively associated with increased oil prices. The heterogeneity analysis indicates that the effect of asset quality improvement brought about by rising oil prices is more salient in conventional banks, and banks with small size, low liquidity and whose funding source relies on customers’ deposits. Practical implications The results favor the diversification of bank funding sources, the improvement of a country’s financial development, the adoption of explicit deposit insurance and macroprudential policies, such as countercyclical liquidity buffers, to weaken the adverse impact of oil prices declines. Originality/value The present paper enriches the literature of oil price–bank risk nexus by analyzing the heterogeneity of bank characters and advances our knowledge on the determined factors of bank riskiness and vulnerability.

US energy high-yield bonds spur default risk

2015 ◽  
Keyword(s):  
Interest Rates ◽  
Default Risk ◽  
Oil Price ◽  
High Yield ◽  
Content Type ◽  
The Past ◽  
The Us ◽  
Low Interest Rates ◽  
Investment Grade ◽  
Energy Companies

Subject Impact of the oil price drop on energy high-yield bonds. Significance The over 50% oil price drop since June 2014 is hitting bonds issued by energy companies, particularly those issued by sub-investment grade corporates. The US high-yield bond market has been growing rapidly over the past five years. The shale boom has generated considerable investment, mainly funded through the issuance of these bonds which benefit from historically low interest rates. As the oil price has plunged, the spread over Treasury yields paid by the average issuer in the energy subsector has more than doubled between July and the December 2014 peak. Impacts Yields currently offered by the energy subsector are not far from pricing in a default scenario. Persistently low oil prices will further darken the outlook for the energy subsector and the high-yield market generally. A possible default cycle in the energy sector could accelerate outflows, overstretching the sector further.

Leading central banks mould investor sentiment

2015 ◽  
Keyword(s):  
Central Bank ◽  
Federal Reserve ◽  
Developing Economies ◽  
Investor Sentiment ◽  
Oil Prices ◽  
Central Banks ◽  
Euro Crisis ◽  
Content Type ◽  
The Us ◽  
Country Specific

Significance In the worst start to a year for US equities since 2008, the benchmark S&P 500 index fell 0.7% during the week ending January 10. December's employment report showed US non-farm payrolls rising by a robust 252,000, but average hourly earnings declined, accentuating deflationary fears. The dollar continued to strengthen against the euro on concerns about a possible euro crisis over Greece and the introduction of sovereign QE by the ECB. With the US Federal Reserve preparing to raise rates, investor sentiment remains fragile. Impacts The tug-of-war between central bank largesse and country-specific, geopolitical and economic risks will become more intense. Markets will focus on renewed fears of 'Grexit' and on concerns about German opposition to an ECB sovereign QE programme. The relentless oil prices slide, exacerbated by the dollar's strength, will put further strain on EM assets. The ruble is likely to weaken further, increasing the scope for contagion to other developing economies.

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