Sunday, August 14

Repsol holds its own against the oil war


Information from a joint release of strategic crude oil reserves of major importing countries such as United States, Japan, Korea, India, China and United Kingdom, it may have the opposite effect to that desired, but the war over the price of raw materials should not affect Repsol.

The Spanish multinational closed the trading session on Tuesday with a 0.66 percent rise in its price to reach a price of 10.6 euros. A rise that continues its 1.56 percent increase on Monday, and that may be indicative of its long-term path, in the eyes of analysts.

Repsol has a margin of rise of 10-15 percent compared to the 10 euros in which its share is moving this last week, and the price that the company sets for oil in its investment program and energy transition until 2025 – at that the experts take to explain their confidence in the company – it is 50 dollars a barrel.

The oil company has, therefore, margin of action even if crude falls to the range of $ 60, which would be convenient for both the selling countries and the buyers.

Biden’s war on oil prices does not work

The U.S. government confirmed this morning that it will release 50 million barrels of crude from its strategic reserves together with the 5 countries mentioned above, in a joint attempt by the nations to stop the upward oil rally and deal with the OPEC and Russia.

According to the information provided by Bloomberg, the US administration confirmed that the barrels will begin to move towards the end of December.

The movement initially caused a drop of 1.5 percent in the price of WTI oil to $ 75.61, and 0.18 percent of Brent oil to $ 79.56. The trend, however, quickly changed to bring Brent oil back to $ 80.83.

It remains to be seen how they will react so much Russia as the OPEC to the joint maneuver of the importing nations, but given the possibility of a stabilization of prices in the medium term, the accounts of Repsol are still in order.

Investor Fabio Castillo Marco explains in eToro that the price of a barrel of oil should be below 60 dollars to positively impact the economy of the buying regions, such as United States, China and Europe.

The price for producers, on the other hand, should be slightly higher to cover costs and get a margin, argues Castillo. Therefore, the target price should be around $ 65.

This perspective was also shared by Víctor Peiro, director of analysis of GVC Gaesco, in his visit to the finance.com podcast, where he assured that “it would be good for the oil companies if the price stabilized around 65-70 dollars per barrel, there is a level where they make cash […] and it is an affordable price for consumers. “

The renewable drive supports Repsol’s calculations

Peiro also pointed out that the drop in the price of oil should not affect Repsol because its entire investment program is based on $ 50 per barrel, as was seen during the presentation of the company’s strategic plan last year.

The strategic plan of the company aims to accelerate the company’s energy transition and achieve net zero emissions by 2050.

A plan that contemplates investments worth 18,300 million euros and that “will be self-financing in a scenario of 50 dollars per barrel of Brent”, a price at which the company assures that “it will generate cash to cover investments, remunerate shareholders and finalize the plan with a level of indebtedness similar to that of fiscal year 2020 “.

Salih Yilmaz, also Bloomberg Intelligence, positively valued Repsol’s plan, stating that it “stands out” among its competitors for its ambitious goal of achieving zero emissions.



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