Archive for December, 2014

Global News

Oil’s collapse is deepening, cutting a wide swath across Canada’s economy in the process.

Outright fear gripped Canadian energy stocks on Monday after an influential analyst report suggested crude prices could fall to as low at $43 a barrel (U.S.), sparking a sell-off of major oil patch firms like Suncor, Imperial Oil and Encana.

The report helped send oil prices to levels not seen since mid-2009 when the Canadian and global economy were mired in recession. International oil prices have now fallen more than 35 per cent since the summer.

U.S. investment bank Morgan Stanley said it believes oil could crumble to the low-$40s range, with “peak oversupply” flooding the market during spring or early summer 2015.

The read-through: further turbulence lies ahead, for stock markets, the Canadian dollar, government revenues and the economy. “Markets risk become unbalanced,” the Morgan Stanley report said.

A report from CIBC also released Monday suggests…

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Financial Post | Business

LONDON — Global oil and gas exploration projects worth more than $150 billion are likely to be put on hold next year as plunging oil prices render them uneconomic, data shows, potentially curbing supplies by the end of the decade.

As big oil fields that were discovered decades ago begin to deplete, oil companies are trying to access more complex and hard to reach fields located in some cases deep under sea level. But at the same time, the cost of production has risen sharply given the rising cost of raw materials and the need for expensive new technology to reach the oil.

Now the outlook for onshore and offshore developments — from the Barents Sea to the Gulf or Mexico – looks as uncertain as the price of oil, which has plunged by 40 percent in the last five months to around $70 a barrel.

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Financial Post | Business

OTTAWA — The Bank of Canada acknowledges that lower-than-anticipated oil prices “will weigh” on the economy, but policymakers are sticking to their hope for a “broadening recovery.” That may be an elusive quest if the other major weight on Canadian growth — a massive load of household debt —continues to climb higher.

“I definitely think it’s a big risk to the economy, going forward,” said David Madani, an economist at Capital Economics, referring to consumers’ borrowing habit for home buying.

[np_storybar title=”Bank of Canada to hike interest rates in May? Not so fast” link=”http://business.financialpost.com/2014/11/25/bank-of-canadas-interest-rate-will-go-up-in-may-and-rise-steadily-after-that-oecd-says/”]Does the OECD know something that Canadian economists do not? The simply answer: Not likely
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“We think the housing market, from an evaluations point of view, is very stretched. We think evaluations have over shot fundamentals,” he said.

“We do see signs of overbuilding in new construction. So, even as the new supply of housing has…

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Financial Post | Business

The global plunge in crude oil prices is impeding Canada’s economic recovery, threatening policy makers’ inflation outlook — and giving Bank of Canada Governor Stephen Poloz more reason to keep his benchmark interest rate unchanged today.

[np_storybar title=”Bank of Canada to hike interest rates in May? Not so fast” link=”http://business.financialpost.com/2014/11/25/bank-of-canadas-interest-rate-will-go-up-in-may-and-rise-steadily-after-that-oecd-says/”]Does the OECD know something that Canadian economists do not? The simply answer: Not likely
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The bank will keep the overnight lending rate at 1 per cent in a decision to be released at 10 a.m. today in Ottawa, according to all 26 economists surveyed by Bloomberg News. The rate has been unchanged since September 2010, and if Poloz does as expected, he’ll extend that pause to make it the longest since the Second World War.

With crude prices tumbling about 26 per cent since the end of September, the Group of Seven’s biggest net exporter of oil may see…

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