Next in this 5-part series is probably the most important – if not the most watched right now – of the 5 sectors…
ENERGY
According to Jeff Lewis of the Globe and Mail, prudence is the keyword in the oil fields. Whether it is the drillers and independent players or the big boys in the oil sands, many are tightening their belts. A number of crude-related companies have cut budgets and/or reduced dividends and if oil prices continue to plummet towards multi-year lows, further cuts are to follow. In order to protect their plunging cash flows, executives are rewriting growth plans.
In case you don’t know how this free fall got started, in November, the Organization of Petroleum Exporting Countries (OPEC) refused to cut production in an attempt to defend market share, causing the decline in oil prices to accelerate.
Chris Cox, an analyst at Raymond James Ltd. in Calgary assures undoubtedly that prices will eventually bounce back up from this slump. High-cost production will be set aside and cheaper oil will fuel new demands. “It’s a question of how long do we need to stay at these low prices to balance the market out in the interim,” Mr. Cox said. “I think it will take a lot longer than most expect.”
