British Prime Minister Theresa May is expected to make a final attempt at persuading lawmakers to back her "new" Brexit deal on Wednesday but the agreement — and May's...Europe Politicsread more
Consumers in China are taking to social media to express their support for Huawei as the U.S. government looks to ramp up pressure on the Chinese smartphone maker.Technologyread more
Tensions between the two parties have heightened in recent months as the campaign for seats in the Brussels and Strasbourg-based parliament has crescendoed.Europe Politicsread more
Shares of Saudi shopping mall operator Arabian Centres were trading at 24.34 riyals ($6.49) in early deals in Riyadh.IPOsread more
There is at least one thing in common between the U.S. and Russia – their willingness to weaken the European Union, a top EU official said.Politicsread more
U.S. President Donald Trump's latest tariff increase — and Beijing's plans to counter them — are hitting U.S. companies in China, according to a joint survey this month by...China Economyread more
"We are also constantly watching whether the trade war will turn into a tech war," Ma said Tuesday, according to a CNBC translation of his Chinese remarks published by a locak...China Economyread more
TransferWise, the money transfer start-up, was valued at $3.5 billion after investors bought $292 million of shares in a secondary sale.Technologyread more
Indian Prime Minister Narendra Modi's likely return to power for a second term will likely be positive for his country's growth, according to economists and investors.Asia Economyread more
Kohl's, J.C. Penney and Nordstrom release disappointing earnings news, putting a damper on their sector.Retailread more
"Pretty much the entire suite of apps that 'talk' over the internet could be vulnerable," said Tom Uren, a senior analyst at the Australian Strategic Policy Institute's...Cybersecurityread more
The U.S.'s embarrassment of oil riches may not have been that beneficial after all.
Those are the findings of a recent Goldman Sachs report, in which the bank explained that the net effects of cheaper crude on growth have been "negative so far," given the impact on oil producers who are now finding it hard to churn out more black gold while maintaining needed levels of capital expenditures.
Although Goldman acknowledged a lift to consumer spending, the summary constituted an admission that the virtues of the boom that sent U.S. oil production skyrocketing, leaving world markets awash in inexpensive crude, may not have delivered the economic boost many observers had anticipated at its outset.
"While cheap oil has … become 'too much of a good thing' for growth, the employment impact of lower oil prices is likely still positive, reflecting the modest effect on employment of the capital-intensive energy sector," Goldman wrote.
Last year, the U.S. produced nearly 10 million barrels per day — the largest amount in decades and second only to Saudi Arabia. As a consequence of the massive buildup of supply that flooded world markets, oil prices slumped by more than half, placing intense pressure on domestic energy producers.
In the research note released on Saturday, Goldman estimated that the level at which U.S. producers would need to breakeven is somewhere within a range of $45 to $80. On Friday, crude closed below $40 per barrel.
Given current levels of crude, the crumbling of capital expenditures is a net drag on economic growth, Goldman notes. It added that oil would need to climb back to $70 at least to give energy capital spending a second wind.
"Adding up, we conclude that the net effect of cheap oil on growth has probably been negative so far, with the capex collapse outweighing the consumption boost," analysts wrote.
"But going forward, the net effect is likely to be neutral at worst under our $30 scenario, but would be moderately positive if oil prices rebound to $50 or $70, reflecting the outsized impact of price changes in this crucial range on energy capex and production," it added.
With that as a backdrop, energy companies are feeling the pinch of lower crude prices. Last year, ratings agency Standard & Poor's warned that 50 percent of energy company bonds were now considered "distressed" and were at risk of default. In total, S&P estimates that $180 billion worth of debt falls in that category.
Meanwhile, at least 50 different oil and gas companies have filed for bankruptcy since last year.
Bakken, Eagle Ford and the Permian Basin — the three elite shale fields that account for the lion's share of U.S. oil production — may face an even more challenging future, Goldman said.
"The three largest shale plays, accounting for roughly half of total US production, face breakevens of $45-$55, implying an especially large impact on capital spending of price changes in this range," the bank added.