How Much Will Oil Companies Lose in a Market Crash?

The recent Wall Street crash coupled with falling oil prices has left a major mark on investors, with the latest findings from the AAII Sentiment Survey revealing that roughly half of individual share and stockholders are now describing themselves as "bearish" for the first time in over five years. In short, "bearish" describes expectations that stock prices will drop over the following six months.

Markets take a pessimistic turn

The sentiment has had a serious impact on oil and gas markets, with the sector reporting losses of US$1 trillion since prices started slipping around two months ago. The downturn was triggered largely by reports that US crude inventories were at an all-time high, which stoked concerns over a global surplus. The drop saw US-listed companies in the S&P 500 report losses of around US$240 billion, while ExxonMobil, one of America's most powerful multinational oil and gas corporations, shed a huge US$35 billion.

Canadians hit with US$80 million per day losses

Canada has also been feeling the sting, with Alberta Premier Rachel Notley confirming that “no option has been taken off the table” in the face of current price crashes and bottlenecks. The statement refers to the possibility of compulsory production curbs designed to help stabilise the market and push up the low price of WCS, which is currently costing Canadian producers around US$80 million per day.

Chinese markets suffer major slide

China has also been hit by the drastic swing in oil prices, with two top Unipec executives suspended following major losses on oil price bets and petroleum contracts. Formally known as China International United Petroleum and Chemical, Unipec is one of the country's biggest and most influential trading companies, with media reports suggesting the losses have cost the giant a cool US$$1.5 billion. In response, the state-owned oil major plummeted by as much as 5% on the Hong Kong stock market.

With the oil and gas market taking on an increasingly bullish outlook, the buzz surrounding renewables is louder than ever. Of course, making the switch to clean energy isn't always straightforward. For a closer look at the challenges associated with harnessing renewables don't miss 'Lubrication of Wind Turbines is Anything but a Breeze.'