LONDON — U.S. and Canadian officials are discussing the imposition of tariffs on Saudi Arabian and Russian oil imports if the two members of the OPEC+ group do not quickly reach a deal to end their price war.
Jason Kenney, the premier of Alberta, told the Financial Times he had held discussions with Washington about tariffs, as a global deal to reduce production appeared to be hanging by a thread.
U.S. President Donald Trump has called on rival oil producers to cut production by as much as 15 million barrels a day, but said on Friday that tariffs “are one tool in the tool box” if Saudi Arabia and Russia do not quickly reduce supplies, threatening a deepening schism with Washington’s key Middle East ally.
Kenney said “prospective import tariffs on oil coming into North America” were under discussion with Washington, even as he signalled Alberta would be open to participating with OPEC in cuts to oil supplies.
Sonya Savage, Alberta’s energy minister, would dial into the online OPEC+ meeting this coming week, he said.
“OPEC+ started this fire and they have to put it out. We’re not going to surrender our industry and we’re prepared to go the distance here,” he said.
Canadian provinces have autonomy over oil production policy, but joint tariffs with the U.S. would require federal approval from Ottawa.
U.S. officials confirmed the Department of Energy was studying whether tariffs would be a viable way to force Saudi Arabia and Russia’s hand, though the discussions are preliminary and among several other options.
The White House declined to comment.
“The U.S. seems more likely to show up to next week’s OPEC+ virtual meeting with credible threats of reprisals than commitments to reduce production,” said Clearview Energy Partners, a Washington consultancy.
Trump has pushed Saudi Arabia and Russia to get a deal to remove as much as 15 per cent of global oil supplies, but the two countries remain at loggerheads, with an online OPEC+ meeting now pushed back from Monday until later in the week after the two sides traded barbs.
Russian President Vladimir Putin said on Friday that a cut to global oil production of 10 million barrels a day was possible, but only if all major producers including the U.S. joined in. But he jeopardized the potential for a deal when he accused Saudi Arabia of launching the price war to hurt U.S. shale producers, in an apparent attempt to drive a wedge between Riyadh and Washington.
Saudi Arabia’s energy minister Prince Abdulaziz bin Salman and foreign minister Prince Faisal bin Farhan both attacked the statement on Saturday, with the latter saying they were “fully devoid of truth” and accusing Russia of “falsifying facts”.
The prospect of a deal drove oil prices up around 40 percent over Thursday and Friday, recovering from an 18-year low below $25 a barrel to above $30 a barrel. They remain down by more than half since the beginning of the year.
The price slump has threatened the future of U.S. and Canadian oil producers who generally require higher prices to turn a profit.
Global demand for oil has plunged almost 40 percent, Trump noted on Friday, the biggest drop in history as measures to slow the spread of coronavirus hit economic activity.
Independent U.S. oil producers have pushed the White House to force Saudi Arabia and Russia to end the price war that has deepened the slump, including proposing tighter sanctions on Russian energy, bans on foreign oil imports, and targeting the Saudi-owned Motiva refinery in Texas.
Trump on Friday alluded to a suspension of U.S. military aid to Saudi Arabia, when he said “we provide military assistance to countries for pretty much free . . . and they don’t even like us”.
Additional reporting by Demetri Sevastopulo in Washington
Canadian Stocks to Buy With Wide Moats – The Motley Fool Canada
Investing in companies with wide moats is one of the best ways to build a portfolio of high-quality companies. In times of significant volatility, finding Canadian stocks to buy with a strong competitive advantage can protect against considerable downside.
If you take a quick glance at the list, you will find some of the best blue-chip companies in the country. Outside of those in the financial sector, most have outperformed the S&P/TSX Index during this pandemic. The odds are that they will continue to outperform in the event the country sees a second wave and more economic hardship.
With that in mind, I consider them the top Canadian stocks to buy to protect your portfolio against considerable losses.
A top utility
Despite poor earnings, pulled guidance, and increasing uncertainty, the markets are showing strength. Over the past month, the S&P/TSX Index is up by 5.05%. In contrast, utilities are showing weakness. Case in point, Fortis (TSX:FTS)(NYSE:FTS) is now down by approximately 3% over the same period.
Despite the recent underperformance, Fortis is holding up quite well during this pandemic. The stock price is only down 3.66% year to date, far outperforming the 11.66% loss of the Index.
The company remains one of the best defensive stocks on the TSX and is a top Canadian stock to buy. This has proven to be true regardless of economic condition. We are in an era of low interest rates, which is a positive for utilities. It means lowering borrowing costs and higher profitability.
Fortis has consistently outperformed the TSX. Over the past decade, it has more than tripled the returns of the index. The company also has an attractive yield (3.71%) and the second-longest dividend-growth streak in the country (46 years). It expects to grow the dividend by 6% annually through 2024.
Analysts have a one-year price target of $59.45, which implies 14.5% upside from today’s price of $51.91 per share. It is trading at only 13.82 times earnings, well below historical and industry averages.
Fortis is a top Canadian stock to buy. It provides reliable income and steady growth at reasonable valuations.
A top-performing Canadian stock to buy
When it comes to recent and yearly performance, one of the top companies has been Canadian Pacific Railway (TSX:CP)(NYSE:CP). As one of the two largest railways in Canada, it is easy to quantify and understand CP Rail’s considerable moat.
Year to date, the company’s stock price is up by 3.98%, and it has a one-year return of 14.95%. Over the past decade, shareholders have seen their investment handily beat the market, with total gains of 507%.
Despite a slowdown in economic activity, analysts still expect the company to post positive earnings growth in 2020. Looking beyond this year, the expectation is for earnings growth in the low teens. This makes it one of the fastest-growing blue-chip companies on the TSX Index.
As of writing, the company is trading in line with the estimating one-year target of $345 per share. It is also trading in line with its historical valuations. However, the company rarely trades at a big discount. This makes CP Rail a rare Canadian stock to buy at any point in time.
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Laurentian slashing dividend 40% in rare move for a Canadian lender – BNNBloomberg.ca
Laurentian Bank of Canada announced an uncommon move for a Canadian bank on Friday by sharply reducing its payout to investors.
Effective with the payment in August, Laurentian’s quarterly dividend will fall 40 per cent to $0.40 per share.
The bank justified the decision by saying it will provide greater flexibility to support its strategic plan and bolster its balance sheet.
“We have a strong capital and liquidity position, and disciplined risk management, but it is a time for prudence,” said CEO François Desjardins in a release.
“Although we believe that current earnings are not reflective of the future earnings power of the organisation, we have reduced the dividend to $0.40 per share which improves operational flexibility until we reap the anticipated benefits of our strategic plan.”
Laurentian on Friday also reported a 79 per cent drop in fiscal second-quarter net income as profit fell to $8.9 million for the three-month period ending April 30.
The Montreal-based bank said it booked $54.9 million in provisions for credit losses during the quarter, compared to $9.2 million a year earlier.
Statistics Canada says first-quarter GDP worst showing since 2009 – CityNews Vancouver
OTTAWA (NEWS 1130) — Statistics Canada says the economy in the first quarter had its worst showing since 2009 as steps taken to slow the spread of COVID-19 forced businesses across the country to close their doors and lay off workers.
Statistics Canada says gross domestic product fell at an annualized rate of 8.2 per cent in the first three months of 2020.
Less damage than expected:
“GDP fell 2.1% in the first quarter, owing to… the COVID-19 pandemic” says Statscan. GDP fell 8.2% annualized, vs estimates for 10%. @NEWS1130
— Richard Dettman (@rwdettman) May 29, 2020
The collapse came as gross domestic product for March fell 7.2 per cent as restrictions by public health officials began rolling out during the month, including school closures, border shutdowns and travel restrictions.
Ontario teachers’ strike and rail blockades in February, as well as a drop in oil prices had made for a rocky start in the first part of the quarter, according to Statistics Canada before the COVID-19-related shutdowns.
Household spending was down 2.3 per cent in the first quarter of 2020, the steepest quarterly drop ever recorded.
The average economist estimate had been for a nine per cent drop in gross domestic product for March, while the average estimate for the first quarter as a whole is for a GDP pullback at an annualized pace of 10 per cent, according to financial markets data firm Refinitiv.
The current April to June quarter is expected to be worse.
Meanwhile, shares at Canopy Growth Corp. are tanking after a reported loss of $1.3 billion in its fourth quarter due to impairment and restructuring charges as the cannabis company said it would reset its strategic focus.
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