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This article was published November 30, 2014 at 14:52.
The price of Brent oil last Friday fell below the threshold of $ 70 a barrel. The WTI fell to $ 66. More than half compared to the record highs of 2008. The decline in oil prices, which proceeds for several months, has intensified in recent days after Thursday OPEC has renounced to counter this devaluation. The cartel of producing countries could reduce the global supply through a production cut, raise oil prices. But chose not to do so while maintaining the current levels. A decision that is likely to have a strong impact on the balance of geopolitical world and that has had, and is likely to continue to have serious repercussions on the markets.
Winners and losers in the stock market
The decline in oil prices is a disaster for those who sell it but not for those who consume it. Bad for economies very dependent on oil exports. Good for those who imports it. Italy for example, that, according to an estimate of Intesa Sanpaolo, one could earn 0.3% of GDP a year more for every $ 10 drop in crude oil (see article opposite). And the same goes for companies. This week, in the face of the collapse of energy stocks, we saw an excellent performance on the Stock Exchange of airlines. Friday the title Lufthansa gained 4.5%, while Air France has scored a rise of 6.4 percent. The entire Travel sector, in a lackluster day for the stock markets, gained 1.38 percent. The reason that this has happened is clear. For airlines voice fuel has a specific gravity remarkable. Exceed 20% of operating costs in the case of big and can even over 40% in the case of low cost airlines. And it is clear that, as for motorists, reduced spending for the full go to the benefit of the budget.
Who loses, obviously, is instead the energy sector. According to the database S & amp; P Capital IQ in the last five sessions of the 100 largest energy companies in the world have burned some 170 billion euro of capitalization. The descent, in hindsight, is in place for some time. At least from mid-June. That is, when oil started to decline since then Brent was devalued by 38% and the value of shares in the energy sector went to tow losing about 20 percent. In terms of capitalization of the top 100 have burned more than 220 billion euro in five months. Analysts, for their part, have drastically cut their earnings estimates. If at the beginning of the year, analysts’ consensus of S & amp; P Capital IQ predicted for energy stocks listed on Wall Street profit growth of 13.06%, today we expect a more rueful +3.34 percent. For next year, which until a few months ago was expected to increase, it is estimated a decline of 3.64 profit.
The risk bubble on shale oil
Saudi Arabia is the largest shareholder of OPEC and the person who has most inspired the decision not to cut production. And he did it because if you can afford it since it has mining costs lower than in other countries and can mantentere decent profit margins even at current prices. The same is not true for US producers who, thanks to the “shale” in recent years have emerged as the new players on the market. Shale oil is much more expensive and is likely to become uneconomical to produce at current oil prices. This, however, puts at risk the sustainability of debt many companies have contracted to finance the extractions. Aware of these risks, the market sold the bonds at high risk in the energy sector where rates have risen on average by 5.6% beginning of the year to 7.3% now. The default risk of shale gas is a threat to the entire bond market at high risk. To date about 16% of the US market by a thousand and $ 300 million of so-called junk bonds refers to the energy sector.
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