That's because the crash in oil prices is putting energy companies under financial stress. Oil revenue has dried up, yet these companies are still saddled with tons of debt.
America's largest banks are now raising red flags about the health of those loans. For the second-straight quarter, the banks have warned investors about an uptick in troubled energy loans.
Banks "are going to lose money on the loans they've made. That's pretty evident -- whether oil prices go to $30 or $80 a barrel," said Dick Bove, an analysts who covers banks at Rafferty Capital.
The American energy boom of the past decade was fueled by a wave of cheap credit from big banks. But now cracks have begun to emerge in that boom because oil prices have plunged from around $100 last year to below $50 today.
Wells Fargo (WFC) on Wednesday said it was forced to set aside more cash to cushion against potential commercial defaults due to the "deterioration in the energy sector."
Bank of America (BAC) reported it may need to set aside an additional 15% to deal with troubled commercial loans, specifically in its oil and gas portfolio.
JPMorgan Chase (JPM) too boosted its oil and gas loan-loss reserves by about $160 million last quarter. The increase was driven by the sentiment that "oil prices will remain low for longer," Marianne Lake, JPMorgan's chief financial officer, told reporters during a conference call.
Still, it's possible banks will need to set aside more money to protect against loan losses if oil prices remain depressed. Banks usually go through "redetermination" in the fall. It's a twice-a-year process where they reevaluate the amount of financing they will provide based on the amount of oil a company can pump at current prices.
Banks could choose to yank financing on struggling oil companies, driving some into fire sales or even out of business.
There could be an increase in bankruptcies "if the financial sector gets scared or handcuffed," said Riccardo Bertocco, a partner at Bain & Co. who specializes in oil and gas.
But JPMorgan chief Jamie Dimon signaled the bank will be patient so as not to ruin long-standing relationships with the oil industry.
"That's what we're here for: to lend to clients, particularly in tough times. You can't be a bank that every time something goes wrong, you run away from your client," Dimon told analysts during a conference call.
Ну вот оно, банки готовятся к потерям от финансирования фракеров, а те, в свою очередь, не смогут выжить без постоянных денежных вливаний. Стоимость нефти на рынке ниже себестоимости фракинговой нефти! Понятное дело, все будет не так плохо, как в 2008, когда треть банковских активов сгорела, сейчас максимум 5% от активов, но сейчас никто спасать банки не собирается, не те настроения и не та угроза экономике. Все понимают, что фракинг - проигранная битва, вопрос в том, сколько это протянется. В Чейз-Морган считают, что пока можно потерпеть, но сколько еще будут списываться в никуда деньги? Всё это "терпеть" исходит исключительно из за давления олигархата, так как нужно ставить на место Россию и Иран, но тот же олигархат начинает терять слишком много денег и рано или поздно оплата кордебалета закончится
И в дополнение
But the decline in production provides fresh evidence of the fallout from the dramatic decline in oil prices in the past year and a half. U.S. oil companies are clearly tapping the brakes after years of explosive production growth.
And the EIA believes production will continue to dip through the middle of next year due mostly to "unattractive economic returns."
It is exactly the outcome that OPEC was hoping to achieve. Despite low prices, the oil cartel has kept aggressively pumping oil to put pressure and steal back market share from high-cost U.S. shale oil producers.
U.S. companies have already cut more than 86,000 jobs due to low oil prices, according to Challenger, Gray & Christmas.
And it has put $1.5 trillion of oil and natural gas projects at risk, research firm Wood Mackenzie estimates. U.S. oil rig counts have also tumbled to the lowest levels in nearly five years.
Коллапс фракинга из за низких цен на нефть привел к потере 86 тысяч рабочих мест. УЖЕ, а будут ещё. И это - хорошо оплачиваемые рабочие места. Люди набрали кредитов, которые вернуть не смогут. Будут дефолты и экономика еще раз получит серпом по яйцам.