Unrest and oil
The chase by Greg Bonnell:
Unrest. That’s what’s been missing from the oil story in recent weeks. We’ve been focused squarely on OPEC refusing to cut production as North American producers pump it out as fast as they can. Today, unrest re-enters the narrative – labour strife and armed conflict. That means we have conflicting drivers influencing the trade. Libya is halting output from some oilfields amid armed clashes. In Nigeria, oil workers are on strike as they push for reforms. Meanwhile, OPEC is still talking tough, apparently willing to tolerate prices as low as $40. Mix it all together and WTI is still below $58 a barrel, but it’s fluctuating in a narrow range between gains and losses.
North American futures are pointing to a solid open in the green as heavy hitters like Exxon Mobil and Chevron make gains in the pre-market. We’ll be watching the Canadian energy names carefully at the open. U.S. futures, however, did weaken a touch as the Empire manufacturing survey for December fell unexpectedly.
In Corporate News, we have a report out of Spain that Repsol’s board is meeting today to approve a bid for Talisman. TLM’s shares are up 16% in the New York pre-market. Talisman confirms, again this morning, that it’s in talks with Repsol, but also others.
With so much happening in the Energy space, BNN’s Jameson Berkow takes to the streets of Calgary to take the pulse of Canada’s energy capital. He’ll have live reports throughout the day.
And watch out for Gold. The yellow metal is under selling pressure ahead of the Fed. Bets appear to be mounting that Yellen and Co. are getting closer to raising rates after repeated vows to keep borrowing costs low for a “considerable time.” And it’s those two words that are in the spotlight ahead of Wednesday’s Fed statement. Will they be dropped from Fed speak, thus signaling a hawkish stance on rates? And what does that have to do with Gold? It’s widely accepted, but always debatable, that as rates rise you can expect to see non-income paying Gold fall.
With the precious metal down almost $12 this morning we could see some pressure on mining stocks in Toronto.
At the place where politics and stimulus meet – Japanese voters have re-elected Prime Minister Shinzo Abe’s Liberal Democrats. While that can be read as a vote in support of Abenomics, bear in mind it was a record-lower voter turnout.
Finance Minister Joe Oliver is singing the same tune on the housing market – no bubble, no crash, no dramatic moves to rein in the mortgage market, soft landing. I mention his reprise only in the context of the Bank of Canada saying our homes may be overvalued by up to 30%. That’s why Mr. Oliver is facing questions yet again about what Ottawa plans to do.
One more piece of corporate news before I run off. PetSmart has agreed to a buyout by a consortium that includes the Caisse de dépôt et placement du Québec. The deal is worth $8.3 billion, and I sincerely hope we have some footage of cute puppies to play as we tell this story.
p.s. Fear not dear note readers, my mentor and most excellent BNN newsroom desk neighbour Frances Horodelski returns this Wednesday.
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