Okay!... Whew!..This is exciting!...Iran blabbed about a $40 dollar barrel!.. Canada will receive some form of reprieve with both interest rate hikes(looking unlikely again!)*good news, and hopefully manufacturing jobs in Central Ontario!.... The two provinces suffering the most in Canada at the moment are Ontario and Newfoundland!...Wow!...Such similar provinces lol. PANIC ??? Nooooooooooooooooooooo! As oil prices skid deeper, ‘panic is beginning to set in’ Michael Babad 07:24 EST Friday, Dec 12, 2014 These are stories Report on Business is following Friday, Dec. 12, 2014. Follow Michael Babad and The Globes Business Briefing on Twitter. Oil, markets sink As analyst Alastair McCaig puts it this morning, “panic is beginning to set in” across financial markets as the collapse in oil prices deepens. His comments came as equity and currency markets faced fresh turmoil, with crude slipping further below the $60-a-barrel mark on a new price forecast and more economic signals from China. Iran’s oil minister added fuel to the fire with his suggestion that there may be $20 to go still where crude is concerned. Stock prices are sinking, while the Canadian dollar plumbs new depths. “With the Iranian oil minister Bijan Namdar Zangeneh now stating that he can see oil being squeezed down to $40 a barrel, panic is beginning to set in,” said Mr. McCaig of London-based IG. “Overnight, Chinese industrial figures continued to soften, encouraging BHP Billiton to lower its expectations for Chinese steel consumption and alter its production levels accordingly,” he added. On top of that, the International Energy Agency today cut its projections for demand for oil next year. Investors reacted to all this by fleeing. Japan’s Nikkei actually gained 0.7 per cent, but stock prices are plunging in Europe and are poised to sink in North America. London’s FTSE 100, Germany’s DAX and the Paris CAC 40 were down by 1.4 per cent as North American markets were getting under way. The S&P 500, Dow Jones industrial average and Torontos S&P/TSX composite also slipped, though to a lesser extent. The Canadian dollar, whose fortunes are tied to the price of oil, touched a low of 86.28 cents U.S. The high wasn’t all that much higher, at 86.80 cents. Oil prices have staged a stunning decline since the summer, plunging by more than 40 per cent and knocking oil-dependent economies like Norway and Russia, whose currencies, like the Canadian dollar, are under exceptional pressure. Big oil companies – Canada’s Cenovus Energy Inc. is but one – are slashing spending while economists fast revise their forecasts for economic growth. And the rout has taken its toll on shares of energy companies across the globe. “Its been another bad week for energy stocks, with oil prices falling more than 9 per cent as OPEC - which accounts for one third of global oil production - cut its 2015 demand forecasts to the lowest in more than a decade, while at the same time its most influential member, the Saudis, continued to deny that there would be any slowdown in production,” said market analyst Craig Erlam of Alpari. “Its a battle over market share at the moment and no one wants to back down. The supply glut in the oil market saw inventories in the U.S. grow again this week, helping to further weigh on oil prices. The decline in oil prices is showing no signs of slowing which would suggest that $50 a barrel is quite likely, and soon.” Where the loonie is concerned, the currency is now at its lowest in about 5 and one-half years. And it’s likely we haven’t seen the last of the slide. “For Canada the impact is negative for the oil sector, investment, the fiscal balance and growth; a stronger U.S. economy and weaker CAD will mitigate some of the downside; however all in all it is net negative,” said chief currency strategist Camilla Sutton of Bank of Nova Scotia, referring to the Canadian dollar by its symbol. “As oil prices fall CAD is also likely to fall,” she added. “However, the relationship is not one for one. Since the recent highs in oil prices, June 30, WTI oil is down 45 per cent, while CAD is down 7 per cent … The lower oil prices fall the more vulnerable CAD becomes. We expect CAD to trend lower in the near-term and early 2015, and to close 2015 at lower levels than it closes 2014.” The loonie, as Canada’s dollar coin is known, is “caught in a massive oil slick,” said chief technical analyst George Davis of RBC Dominion Securities. “The uninterrupted selloff in crude oil prices remains at the forefront as a key market driver, causing the commodity currencies to feel the brunt,” he said. Yesterday, Norway’s central bank cut interest rates by one-quarter of a percentage point over fears what the oil collapse will mean to the economy, while Russia’s central bank hiked by a full point to defend the battered ruble and stem an outflow of capital. One of the big issues, said Mr. McCaig, is the threat of deflation, and what that could mean. That’s a huge issue particularly in Britain and the troubled euro zone. Of course, it all plays out in different ways. Economists, for example, are cutting their outlook for Alberta, which is home to Canada’s oil patch, while the central provinces of Ontario and Quebec should benefit from lower energy costs and the weaker currency. “Lower oil prices are just like a tax cut for consumers so the expectation is that some of that wealth effect will be spent,” said analyst Jasper Lawler of CMC Markets in London. “There is typically a lag between when petrol prices to when people start to feel richer.” (I got gas in Toronto this morning at $1.009 a litre. No, I didn’t actually feel richer, but I did fill up the tank.)
Posted on: Fri, 12 Dec 2014 15:59:08 +0000
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