After a year full of stock buybacks and dividends, investors in low-leveraged Canadian oil and gas producers will reward shareholders even more in 2023 as they generate abundant cash and show little appetite for acquisitions.
Oil companies face fluctuating prices and Canadian companies are also taking an unusually heavy discount for their heavy crude.
Most large and medium-sized producers expect to be net debt-free in the second half of 2023, according to the sources. Net debt represents a company’s gross debt less cash and similar assets.
Firms could increase buybacks next year, analysts say, before Canada’s 2% buyback tax takes effect in 2024.
Oil Preparing for a 10% Weekly Drop
Oil prices remained flat on Friday, but both benchmarks were headed towards a weekly loss by fears that weak economic prospects in China, Europe and the United States are weighing on oil demand.
Brent crude futures were trading $76.16 a barrel, up 1 cent, at 09:19 GMT. Brent crude hit a 2022 low this week. West Texas Intermediate crude was up 7 cents to $71.53 a barrel.
The contracts are set for weekly losses of around 10% each, the worst weekly declines in percentage terms since August and April, respectively.
The market structure for Brent contracts has changed, meaning that contracts with short-term delivery are cheaper than those with six-month delivery, indicating that traders see weaker demand.
Britain reforms its finances to take advantage of Brexit
Britain on Friday unveiled 30 measures to reform the financial sector, including repealing EU rules that the government says will unlock investment and keep the city of London one of the most competitive financial centers in the world.
The planned reforms They also include a review of the rules established after the financial crisis more than a decade ago to hold bankers accountable for their decisions and the easing of capital requirements for small lenders, after much lobbying by banks.
Brexit has largely sealed off London from the European Union, putting pressure on the government to relax rules, as Amsterdam has overtaken London to become Europe’s leading stock trading hub, it joins competition from New York and Singapore.
Exiting the European Union allows Britain to write its own rules, but as home to dozens of international banks, it has little chance to radically diverge from international norms.
UK Chancellor of the Exchequer Jeremy Hunt will formally present the plans at a meeting with financial sector officials in Edinburgh.
Producer prices in China fall and consumer price inflation slows
Chinese factory prices fell year-on-year for the second consecutive month in November, while consumer price inflation eased, signaling sluggish activity and weak demand in an economy hampered by tight import controls.
Analysts said they expect the government to keep interest rates low and take steps to boost confidence.
The producer price index (PPI) fell 1.3% from a year earlier, unchanged from the year-on-year contraction seen in October, according to data from the Office of National Statistics (ONE) released on Friday.
November’s consumer price index (CPI) rose at the slowest pace in eight months, up 1.6% year over year, less than the 2.1% annualized increase seen in October .
In a high-level political meeting on Tuesday attended by the Politburo of the ruling Communist Party, it was stressed that in 2023 the government will focus on stabilizing growth, boosting domestic demand and opening up abroad.
Recession could support the dollar after the monstrous rally of 2022
An impressive rise in the US dollar it trampled foreign currencies, sent corporate profits plummeting and gave investors one of the year’s few winning deals. Though the greenback has stumbled in recent weeks, recession fears could keep it up into 2023.
At its high in September, the dollar hit its highest level in nearly two decades, after surging 20% against a basket of currencies. Those year-to-date gains have been roughly halved as investors bet the Federal Reserve is closer to slowing the pace of rate hikes that have helped boost the dollar’s gains.
Investors flocked to the dollar – a popular destination in uncertain times – to take refuge from market volatility, spurred on by rising global inflation, rising energy prices and the Russian invasion of Ukraine.
