Last man standing
Since my last column the oil price has breached US$50 a barrel but not for long. It is however, lurking just underneath and may breach again soon. I don’t expect much movement further north until supply and demand even out somewhat and despite Nigerian and Venezuelan cuts in production, mostly circumstances enforced, there are other nations that are more than willing to take market share if it is up for grabs. The Canadian oilsands will no doubt be back in the game ASAP to fulfill its supply obligations.
As I write OPEC is meeting once again. This time in Vienna. Despite the media scrum I don’t really expect much to come out of the meeting. As long as Saudi Arabia and Iran are poles apart, and it would take a miracle to get them to agree, then OPEC in my view is pretty much just an expensive talking shop. Iraq is well in the game and is looking to expand production too.
It’s status quo for the worst folks. I really think there is a concerted effort to keep oil prices down to shut production down, most notably in North America. The only trouble is that if markets can force a little bit of a rise now there will be some shale plays that may start up again. I have read though that even US$60 a barrel may not be enough to get rigs drilling again. I can understand that. Any recovery in this fickle market needs to show firm signs of sustainability.
It sounds really trite talking about markets and prices. Men in suits posture on TV and drag out ever more bewildering charts. But it’s people at the sharp end of all this. They’re the ones that are losing their businesses, their jobs and their homes. I don’t see too much on the business channels about this except when a bank gets a headline about bad loans. Yesterday (June 1) I saw that National Bank of Canada’s quarterly profits are down 48 per cent largely attributed to CAN$183 million of soured energy sector loans. Royal Bank of Canada (RBC) and Toronto Dominion Bank have also both reported setting aside more for bad loans. The longer this goes on the worse it will get. Banks are not keen on giving you an fiscal umbrella when the rain sets in.
I guess it’s hope for the best and live out the worst and hope to be among the last men standing if and when there is a recovery.
National Bank of Canada’s quarterly profits are down 48 per cent largely attributed to CAN$183 million of soured energy sector loans. Royal Bank of Canada (RBC) and Toronto Dominion Bank have also both reported setting aside more for bad loans. ”