S&P Capital IQ™ Energy Event Sheds Light on Sustained Low Oil Prices’ Impact on the Investment Landscape
In the week of the 166th OPEC Meeting, S&P Capital IQ London Conference Discusses Key Oil Industry Issues
London, 4 December 2014 - With prices for Platts-assessed Dated Brent crude continuing their plunge to new recent lows, S&P Capital IQ, a leading provider of multi-asset class and real time data, research and analytics, held a high profile energy event in London on 26th November which looked at the spill-over effect of falling oil prices on the investment landscape.
Over 150 senior level professionals from leading firms across the financial services industry attended the event where analysts and area specialists from across McGraw Hill Financial - namely S&P Capital IQ, Standard & Poor’s® Ratings Services, Platts and S&P® Dow Jones Indices – gave presentations, and led panel discussions and workshops covering a number of topics. These topics included a review of recent movements in oil forward curve prices, the impact of oil price decline on Standard & Poor’s ratings, and the risk management challenges for industry practitioners leveraging energy futures and indices for hedging.
“If prices remain weak, something many forecasters suggest, then governments from Moscow to Caracas and Lagos to Riyadh will feel the impact on macroeconomic policy,” commented Imogen Dillon Hatcher, President of S&P Capital IQ. “However, lower prices don’t mean bad news for everyone, as oil importing nations like India are given a distinct advantage.”
OPEC’s decision not to cut crude oil production has underlined the challenges for oil field services companies, alongside U.S. shale drillers with higher costs. Speakers at the event predicted that there would be continued downward pressures on producers and service companies from the sustained low oil prices, but these could moderate in North America if the U.S. lifted their export ban. A U.S. glut of light crude oil, largely thanks to growth in domestic production from shale fracking means that North American oil prices would likely be boosted if the U.S. started exporting again.
Event presentations also looked at other key themes including which industries have the highest direct carbon intensity and the effect on corporate creditworthiness. The two are inextricably linked with analysts agreeing that corporate credit is impacted by carbon pricing from four main risk aspects - increasing global environmental regulations, emissions market pricing, business risk across the value chain, and financial risk on profitability, cash flow, and asset and liability valuation.
“As the drop in oil prices continues to dominate the headlines, financial professionals will keep speculating on how low it can go,” noted Imogen Dillon Hatcher. “Using S&P Capital IQ tools and insight from professionals across the McGraw Hill Financial group, we are working with clients on what this might mean for asset prices, credit risk levels and the energy sector more broadly.”
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