The Week That Was
Big CapX For Big Oil
Exxon Mobil Corporation (NYSE:XOM) plans to spend about $20 billion on refineries, petrochemical plants and other projects in and around the Gulf of Mexico. The announcement came on Monday, underscoring how “Big Oil” is increasingly turning to America and is resuming spending in a big way. New Exxon CEO Darren Woods outlined the 11-project spending plan, mostly aimed at creating new outlets for U.S. natural gas, in a speech at the annual CERAWeek conference. That came after a meeting with analysts last week in which he said Exxon is poised to nearly double its production from U.S. shale basins in the next decade. Exxon’s $20 billion investments in the Gulf Coast will continue through to at least 2022, according to the company.
Chevron Corporation (NYSE:CVX) is expected to unveil similar plans this week, ramping up its operations in the already booming Permian basin in West Texas and New Mexico. The company’s output from the region could reach 900,000 barrels a day by 2020 if oil prices continue to rise, according to industry analysts. The Paris-based International Energy Agency (IEA) predicts the U.S. will be the greatest contributor to new global supply through 2022, with shale production rising to 1.4 million barrels a day assuming prices remain around $60 a barrel.
Both Exxon and Chevron are held in Macrovue’s Big Oil Vue.
Happy Anniversary Mr. Market
Thursday 9th March marks the eighth anniversary of the March 9th 2009 closing low set by the S&P 500 index (NYSE:SPX) in the wake of the Global Financial Crisis (GFC). This was a fear-inducing rout that took the benchmark indices down some 60% from peak to trough. If we use that date, then this remains the second-longest bull market since World War II.
The Week Ahead
FOMC Meeting – A Done Deal
The U.S. jobs report has pretty much guaranteed we will get a rate rise from the Fed when they conclude their two-day meeting on Wednesday 15th March. Data released last Friday shows that the U.S. job market added more jobs in February than economists expected. Employers in the U.S. added 235,000 non-farm jobs in February, according to the Bureau of Labor Statistics. The unemployment rate inched down to 4.7%, from 4.8%. This result beat the economists’ consensus, which had called for 190,000 non-farm job gains. Investors will also be looking for clues as to when the U.S. central bank may follow through with more rate increases later this year.
Article 50 Is On Its Way
British Prime Minister Theresa May has made it clear she intends to initiate Britain’s EU exit by triggering a provision of the European Union’s treaty known as Article 50 before the end of this month. A bill authorising the government to do so may be voted on this week (as soon as Tuesday 14th March according to CNBC), and could continue to pressure the beleaguered pound.
The Dutch Election
In the Netherlands, the populist anti-EU Dutch Freedom Party (PVV) is scheduled to secure a strong representation in the election held on 15th March. A large victory could rekindle fears around the other European elections coming up. The PVV leader Geert Wilders is unlikely to become PM however, as none of the other major parties are expected to partner with him.