Crude oil futures settled modestly higher on Friday, lifted by the International Energy Agency’s forecast that global crude demand will grow to a record 101.9 million barrels per day this year.
West Texas Intermediate Crude oil futures for May ended higher by $0.36 or about 0.4% at $82.52 a barrel.
Brent crude futures were up $0.16 or 0.19% at $86.25 a barrel a little while ago.
The International Energy Agency (IEA) said in its monthly oil market report that oil demand will grow by 2 million barrels per day in 2023, driven mostly by stronger Chinese consumption after the lifting of COVID restrictions.
The IEA expects supply to remain tight, and sees a drop of 400,000 barrels per day by the end of the year.
Earlier this week, data from China showed that the world’s second largest economy saw its crude oil imports rise by 12.4 million barrels per day in March, up from 10.7 million barrels in February. The March volume was the largest since June 2020.
Data from Baker Hughes showed the total number of total active drilling rigs in the United States fell by 3 this week, after falling 4 last week.
The total rig count fell to 748 this week. Oil rigs dropped by 2 this week to 588, while gas rigs fell by 1 to 157.
Beijing this week announced revisions to its conscription policy and said that should China enter a state of war, veterans and educated college students can expect to be on top of the list to be drafted.
China has positioned these changes as a necessary step to modernize the People’s Liberation Army (PLA) and to bolster its combat effectiveness.
However, adding the nation’s most educated as priority draftees runs counter not only to traditional Western conscription practices, but China’s as well.
Chinese honor guard arrive for the welcoming ceremony for French President Emmanuel Macron and China’s President Xi Jinping in Beijing on April 6, 2023. (LUDOVIC MARIN/AFP via Getty Images)
“It fits into the context of PLA modernization,” Heino Klinck, former deputy assistant secretary of defense for East Asia and military attaché to China, told Fox News Digital. “The PLA has historically been a military based on conscripts from the countryside. I think Chinese President Xi Jinping is trying to further bolster his communist bona fide by ensuring that all segments of Chinese society are a part of the national military buildup.”
Several of China’s top universities already have military departments included in their institutions where students can combine their studies with military training.
One top official in China’s Central Military Commission told a PLA newspaper this week that colleges and universities play an essential role in recruiting and that there is a particular interest in female and male students or graduates with a background in science, technology, engineering and mathematics.
China also plans to instate a new standardized recruitment processes that will implement steps to improve the physical, mental and political assessments of recruits.
Ultimately, Beijing hopes to “provide institutional guarantees for consolidating national defense and building strong armed forces” by “recruiting more high-caliber soldiers,” according to a government announcement Wednesday.
Chinese honor guard arrive for the welcoming ceremony for French President Emmanuel Macron and China’s President Xi Jinping in Beijing on April 6, 2023. (LUDOVIC MARIN/AFP via Getty Images)
Klinck explained that the revisions to China’s conscription policies were not necessarily a surprise, though their timing has prompted some pause for concern.
“I don’t know what’s worse: that they are tone-deaf or are they intentionally messaging?” he questioned.
The announcement came just days after top U.S. lawmakers traveled to Taiwan in a show of “deterrence” against Chinese aggression, which occurred simultaneously with a trip by Taiwanese president Tsai Ing-wen to the U.S., where she met with House Speaker Kevin McCarthy.
Beijing responded by launching large-scale combat exercises around Taiwan that simulated sealing off the island — similar to drills it launched last year after then-House Speaker Nancy Pelosi traveled to Taipei.
Klinck described the conscription announcement as “arrogant” and noted his concern that Beijing is “recklessly making policy announcements with a total disregard to how the international community will interpret them.”
“The Chinese are usually pretty good when it comes to messaging and consistency,” he added. “I think that this is once again an indication that we should not anticipate the Chinese Communist Party softening its stance on Taiwan, softening its stance on the South China Sea or any other contentious geopolitical issue of concern.”
It is unclear how many fighting-age men China’s latest policy changes would add to its more than 2 million-strong ranks, or how its army could hold up to top militaries like the U.S.
A boat moves through the water at the 68-nautical-mile scenic spot, the closest point in mainland China to the island of Taiwan, in Pingtan in southeastern China’s Fujian Province on Aug. 5, 2022. (AP Photo/Ng Han Guan)
Western defense officials have warned that Beijing plans to invade Taiwan by 2027, and last year President Biden raised eyebrows after he said he would send boots on the ground to defend the island from a Chinese attack.
“The U.S. needs to speak softly and carry a big stick,” Klinck advised regarding U.S.-Chinese relations. “We need to be very clear that we want a positive relationship with China, but on mutually beneficial terms.”
“It cannot be a relationship where we want it more than the Chinese do. And any attempt to engage with the Chinese at all costs is not in our national interests,” he added.
My team member, Allan Meyer, recently attended the Canadian Association of Petroleum Producers (CAPP) conference hosted in Toronto by Bank of Montreal. He came back impressed. As a result, we decided to analyze oil and gas producers using our investment philosophy, which focuses on safety and value, and see what the numbers say. We’d also like to remind investors that this sector can be cyclical and volatile, so we tend to target very limited to no exposure to it in our client portfolios.
The screen
We started with Canadian-listed oil and gas companies with a market capitalization of $1-billion or more, sorted from largest to smallest. This is a safety factor, as large companies tend to be more stable and liquid than small ones.
Dividend yield is the projected annual dividend per share divided by the share price. Allan and I like to get paid while we wait for capital appreciation, and dividends generally reflect safety and stability. So, we limited our search to dividend payers.
Debt/equity is our final safety measure. A smaller number is better and implies lower relative risk. It’s difficult to go bankrupt if you have little or no debt.
Price/cash flow is the share price divided by the projected annual cash flow per share. It’s a valuation metric, and the lower the number, the better the value. In the oil and gas sector, cash flow is often considered more reliable than earnings-based financial ratios because of the high costs in the sector related to non-cash items such as depreciation, amortization and deferred taxes.
Enterprise Value/EBITDA is known as the “takeover multiple.” It is a measure of the company’s total value divided by earnings before interest, taxes, depreciation and amortization (a proxy that’s like cash flow). Unlike many common valuation metrics, it accounts for the undertaking of debt by an acquirer. Smaller numbers mean a company is less expensive (i.e. better value).
We’ve also included the 52-week total return to track performance, and the average and median numbers to allow for better comparability within the group.
Source: Refinitiv Eikon & Wickham Investment Counsel Inc.
Parex Resources PXT-T +1.44%increase scores well for safety and value, and has the lowest EV/EBITDA ratio; one wonders if the company is a takeover candidate. Birchcliff Energy BIR-T +0.73%increase also looks interesting. Vermilion Energy VET-T +1.10%increase is the least expensive on both of our valuation metrics, while Peyto Exploration & Development PEY-T +1.58%increase has the highest dividend and is attractively priced. Headwater Exploration HWX-T -0.31%decrease has almost no debt and pays a nice dividend. In general, the list offers attractive valuations, light debt loads and healthy dividend yields.
The BMO Canadian Oil and Gas ETF and the iShares Energy ETF are options for investors who like the sector, but want to diversify away individual security risk.
Investors should contact an investment professional or conduct further research before buying any of the companies or ETFs listed here.
Canada is experiencing a labour boom – and it extends to just about every corner of the country. In March, eight provinces had unemployment rates below 6 per cent, which has never happened before. The national rate of 5 per cent is hovering near all-time lows, a reflection of tight labour market conditions.
Over more than two decades, the disparities between provincial unemployment rates have been shrinking, and now those differences are especially small. Despite having very different economies, Alberta and Nova Scotia enjoy jobless rates of 5.7 per cent. Quebec boasts the lowest, 4.2 per cent, although B.C. isn’t far behind at 4.5 per cent.
“Canada often sees stark variation in job-market conditions across different regions of the country, but that is not the case today,” wrote Robert Kavcic, senior economist at Bank of Montreal, in a recent client note.
“This can be seen as a good thing. We’ve often vouched for policy measures that improve the mobility of labour in this country (to help counter regional imbalances). It can also be seen as evidence that the economy is very broadly hot, not powered by any particular region or industry.”
It’s possible for unemployment rates to fall if jobless people leave the labour force by no longer actively looking for work. At that point, they would not meet Statistics Canada’s definition of unemployed.
But that’s not what’s happening here. The labour participation rate – the proportion of the country that is working or searching for a job – was 65.6 per cent in March, about the same as five years earlier.
“We’re seeing very low discouraged [job] searchers right now,” Andrew Fields, a senior analyst at Statscan, recently told The Globe and Mail.
Here’s how the bank did: Adjusted earnings of $4.32 per share vs. $3.41 estimate
Revenue of $39.34 billion vs. $36.19 billion estimate
The bank also boosted a key piece of guidance: Net interest income will be about $81 billion this year, about $7 billion more than their previous forecast.
U.S. applications for jobless benefits rose to their highest level in more than a year, but remain at relatively low levels despite efforts by the Federal Reserve to cool the economy and job market in its battle against inflation.
Jobless claims in the U.S. for the week ending April 8 rose by 11,000 to 239,000 from the previous week, the Labor Department said Thursday. That’s the most since January of 2022 when 251,000 people filed for unemployment benefits.
The four-week moving average of claims, which evens out some of the week-to-week fluctuations, rose by 2,250 to 240,000. That’s the most since November of 2021.
Last week, the Labor Department unveiled revised estimates of the number of weekly applications for jobless benefits under a new formula it is using to reflect seasonal adjustments. The new formula, which led to an increase in its weekly tally, is intended to more accurately capture seasonal patterns in job losses.
Applications for unemployment benefits are broadly seen as reflective of the number of layoffs in the U.S.
The job market seems to be finally showing some signs of softening, more than a year after the Federal Reserve began an aggressive campaign to cool inflation by raising its benchmark borrowing rate nine times in about a year.
America’s employers added a solid 236,000 jobs in March, suggesting that the economy remains on solid footing despite the nine interest rate hikes the Federal Reserve has imposed over the past year in its drive to tame inflation. The unemployment rate fell to 3.5%, just above the 53-year low of 3.4% set in January.
In its latest quarterly projections, the Fed predicts that the unemployment rate will rise to 4.5% by year’s end, a sizable increase historically associated with recessions.
Also last week, the Labor Department reported that U.S. job openings slipped to 9.9 million in February, the fewest since May 2021.
Some details from Friday’s Labor Department report raised the possibility that inflationary pressures might be easing and that the Fed might soon decide to pause its rate hikes. Average hourly wages were up 4.2% from 12 months earlier, down sharply from a 4.6% year-over-year increase in February.
Also Thursday, the government reported that wholesale prices fell sharply in March. One day earlier, the government said consumer prices rose just 0.1% from February to March, down from 0.4% from January to February and the smallest increase since December. However, prices are still rising fast enough to keep the Federal Reserve on track to raise interest rates at least once more, beginning in May.
Layoffs have been mounting in the technology sector, where many companies hired aggressively during the pandemic. IBM, Microsoft, Salesforce, Twitter and DoorDash have all announced layoffs in recent months. Amazon and Facebook have each announced two sets of job cuts since November.
About 1.81 million people were receiving jobless aid the week that ended April 1, a decrease of 13,000 from the week before. That number is close to pre-pandemic levels.
Dominion Voting System’s defamation lawsuit against Fox Corp. and its cable TV networks will go to trial on Monday.
Industry analysts and experts watching the case say the biggest consequence to the company will likely be financial, as viewership and advertising remain steady.
But the outcome of the case is far from clear, and neither side appears interested in settling.
Dominion Voting System’s defamation lawsuit against Fox Corp. and its cable TV networks will go to trial in the coming days, but it remains to be seen what, exactly, the lawsuit means for Fox and its business.
Dominion brought its lawsuit against Fox and its TV networks, Fox News and Fox Business, in March 2021, arguing their hosts pushed false claims that Dominion’s voting machines were rigged in the 2020 presidential election that saw Joe Biden triumph over Donald Trump. The trial begins on Monday.
IAC Chairman Barry Diller, who was chairman and CEO of parent-company Fox from 1984 to 1992, said at a media conference hosted by startup Semafor earlier this week that although he thought Fox should lose the case, handing Dominion “a very big reward,” that the company will just pay the damages and move on.
“What’s it going to do? Worsen [Fox Corp. Chair] Rupert Murdoch’s reputation?” Diller joked.
WATCH NOW
VIDEO02:34
Fox News sanctioned for withholding evidence in Dominion lawsuit
On its face, the biggest potential consequence for Fox would be a financial hit: The company will have to pay to defend itself against the claims and, if it loses, possible damages to Dominion, upwards of $1.6 billion. No matter the outcome, an appeal is likely.
Fox, which has denied the claims made by Dominion and said it is protected by the First Amendment, has opposed the amount of the damages that the voting machine maker is seeking. The Delaware judge overseeing the case — who ruled a trial was necessary — recently said it would be up to a jury to decide the matter.
Business risk
Neither side has shown signs of a wanting to settle the case, and the two parties have met once at a court-ordered meeting. But even if they did come to a settlement, Fox would still be on the hook for a steep payment, experts say.
“There could be a lot of implications depending on how it plays out,” said Imraan Farukhi,an assistant professor at Syracuse University’s S.I. Newhouse School of Public Communications. Besides the financial impact, Farukhi added, “The other question is what will they do with their talent if they lose? The majority of the stars at Fox are implicated. Any other news organization would have probably seen their hosts losing their jobs for improper reporting.”
Lou Dobbs, who is slated to be a witness, saw his weekday program on the Fox Business network canceled the day after he was named a defendant in the defamation lawsuit of a second voting machine company, Smartmatic. At the time, Fox said his show’s cancellation was in the works prior to the lawsuit.
Shows helmed by Tucker Carlson, Maria Bartiromo, Sean Hannity, Laura Ingraham and Jeanine Pirro have been listed as evidence by Dominion. Those hosts also are slated to testify in Dominion’s case.
On Wednesday, the Delaware judge overseeing the case sanctioned Fox for withholding evidence and reportedly said if depositions or anything else needed to be redone, it would come at a cost to the company.
But the most likely immediate effect on Fox and its bottom line could come in the form of libel training classes for talent and others in the newsroom, as well as an increase in production insurance policies that cover defamatory statements, Farukhi said. Those policies could also help cover the costs related to the lawsuit for Fox.
Still, a near-term financial impact is unlikely to spell disaster for the network.
As thousands of documents have been unveiled in recent months, revealing skepticism from Fox’s top TV hosts and executives about the election-fraud claims that were made on air, Fox News’ ratings have remained stable, according to Nielsen. Similarly, so has the parent company’s stock price.
Fox Corp.’s stock has remained stable in recent months as evidence implicating its TV hosts and executives have come to light in Dominion’s defamation lawsuit.
Fox News’ steady audience has also ensured that advertisers stick around, too. Oftentimes, companies will pull their ads when TV networks are embroiled in controversy. For Fox, that hasn’t been an issue in its lawsuit battle with Dominion.
“I am hesitant to say how this could implicate their business when it comes to viewership and sponsors,” Farukhi said. “Their audience and sponsors seem to not really care what the network is being accused of in this case. They only stop viewing Fox when it provides information that is not congruent with their predetermined conclusions.”
Fox Corp. CEO Lachlan Murdoch sounded confident about the network’s future when asked during a March investor conference if he could share anything about the case.
“I think fundamentally what I’ll just say about it is that a news organization has an obligation and it is an obligation to report news fulsomely, and without fear or favor,” Murdoch said at the time. “That’s what Fox News has always done and that’s what Fox News will always do.”
He added that “the noise that you hear about this case is actually not about the law and it’s not about journalism and it’s really about politics.”
No other questions were asked during the conference.
Amendment protections
Fox has continuously denied the claims made against its network and hosts, arguing the case is about First Amendment protections “of the media’s absolute right to cover the news.” Attorneys have argued that covering the allegations being made by Trump and his attorneys was newsworthy and protected by the First Amendment.
For that reason, the case has been closely watched by First Amendment experts. While it’s difficult to prove a defamation case in the U.S., many believe there’s enough evidence this time that it could happen.
“The fact that the lawsuit hasn’t settled yet, and Dominion likely doesn’t want to settle, shows they have a good likelihood of prevailing,” said Gautam Hans, an associate law professor and First Amendment expert at Cornell University. “There’s been a lot of embarrassing, contradictory statements that have come out from the discovery process that even if Dominion loses there will have been pain inflicted on Fox along the way.”
The evidence gathered for the case — which includes text messages, emails and other internal communications between Fox’s executives, TV hosts, producers and others tied to the newsroom — shows those at the network and parent company were skeptical of what was being reported.
The elder Murdoch, the Fox Corp. chair, suggested the TV hosts “went too far,” and said during his deposition that some of the network’s commentators “endorsed” the claims.
Paul Ryan, the former Republican speaker of the House and a Fox board member, told Rupert and Lachlan Murdoch “that Fox News should not be spreading conspiracy theories,” according to court papers.
Fox News host Carlson said in a text message to his producer that pro-Trump attorney Sidney Powell was lying, according to court papers. In other texts, Carlson said, “It’s unbelievably offensive to me. Our viewers are good people and they believe it.”
Amazon Web Services is launching the Bedrock service for generative artificial intelligence in limited preview.
Through Bedrock, clients can use language models from Amazon and startups AI21 and Anthropic, as well as Stability AI’s model for turning text into images.
Amazon said Pegasystems, Deloitte and Accenture and are among the companies looking forward to using Bedrock
Brookfield Infrastructure Partners LP BIP-UN-T -0.32%decrease is acquiring the world’s largest freight container player, Triton International Ltd., for US$4.7-billion in cash and shares, as the industry seeks to rebound from an inventory overhang in some areas that is weighing on demand.
Brookfield is paying US$85 a share for Triton, US$68.50 of which will be paid in cash and the rest in class A exchangeable shares. The deal is a 35-per-cent premium to Triton’s closing price on Tuesday.
Shares of Triton jumped 32 per cent Wednesday on the New York Stock Exchange, closing at US$83.34. Including debt, the transaction is valued at about US$13.3-billion.
Triton is the world’s largest owner and lessor of freight containers, with a container fleet that encompasses more than seven million 20-foot equivalent units. “Triton is an attractive business with highly contracted and stable cash flows, strong margins and a track record of value creation,” Sam Pollock, chief executive of Brookfield, said in a news release.
“Brookfield Infrastructure’s significant resources and long-term investment horizon will support Triton’s franchise, underpin our commitment to providing unrivalled service, and support continued investment in our growing business,” said Brian Sondey, CEO of Triton.
Pending approval by Triton’s shareholders and required regulatory approvals, the transaction is expected to close in the fourth quarter.
More than 80 per cent of the world’s goods are transported by shipping containers sailing across the seas, according to the International Monetary Fund.
The COVID-19 pandemic led to widespread problems in global supply chains, but many of the issues are now being resolved. Still, shifts in consumer demand have led to some imbalances in the market. According to market forecaster Container xChange, the shipping industry is experiencing a freight recession as retailers who overstocked use up their excess stock.
The latest Drewry World Container Index, at US$1,710 a 40-foot container, is 36 per cent lower than its 10-year average of US$2,689 and down 79 per cent from a year ago, but 20 per cent higher than average prepandemic rates in 2019.
A survey conducted in April by Container xChange indicates that 48 per cent of supply chain professionals expect the shipping industry to strengthen this year and surpass last year’s peak.
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