SaxoTV

1.2 Trillion Dollars: The price of cheap oil

571 views
December 16, 2014 bank, bank shares, banking, banking capital, banking industry, banking sector, banking system, banks, banks exposure, banks stocks, bonds, bonds market, bonds update, brent, brent crude, brent geo-political, brent oil, brent price, brent spread, brent wti, brent wti spread, canada, canadian, cheap, cheap oil, drilling, emerging, emerging economies, emerging market, emerging market bond market, emerging market bonds, emerging market currencies, emerging market economies, emerging markets, emergingmarkets, equities, equities trading, equity, equity index, equity market, equity market 2014, equity markets, equity portfolio, equity portfolios, equity strategy, equity trading, exxon, exxon mobil, exxon mobil shares, exxon shares, exxonmobil, msci world, offshore, oil, oil commodities, oil companies, oil company, oil crash, oil demand, oil industry, oil market, oil markets, oil news, oil price, oil prices, oil production, oil range, oil stocks, oil supplies, oil supply, oil trading, oil wealth, oilsupply, repsol, saxo bank, saxo tv, seadrill, talisman, trading, tradingfloor.com, world energy index, wti, wti and oil, wti brent, wti brent spread, wti crude, wti crude oil, wti price, wti supply
1.2 TRILLION Dollars. That's the amount wiped off the market value of companies in the MSCI World Energy Index in just 6 months, according to Saxo’s Peter Garnry.

He warns that as oil prices weaken further, the pain will continue for these companies. He highlights Canadian firm Talisman which is down 50% since June. It’s now agreed to be bought by Spain’s largest oil company, Repsol.

Offshore drillers and equipment providers have also been hit by falling oil prices, with Norway’s Seadrill down 67% since July. But Garnry says oil companies that have diversified, such as ExxonMobil, have only lost 15% of their share price over the same period.

Garnry notes that banks too are exposed, most notably in emerging markets, where they haven’t been able to use the bond markets to transfer the risk to investors. He also says that Canadian banks are vulnerable and could see a 10% drop in overall profitability if low oil prices continue.