Get Adobe Flash player

Daily Archives: November 1, 2008

Oil prices take new heavy tumble

 Image Oil prices fell heavily again yesterday as the prospect of a global recession and weakening energy demand weighed on the market, analysts said.

 

New York’s main contract, light sweet crude for December delivery shed 1.46 dollars to 64.50 dollars per barrel.
London’s Brent North Sea crude for December lost 1.64 dollars to 62.07 dollars. Prices had fallen on Thursday after data showed that the US economy — the biggest consumer of energy in the world — contracted in the third quarter. The market was also hit by news that the US government’s Energy Information Administration (EIA) downgraded its August estimate for US oil demand. “Sentiment turned bearish (negative) as the government figures revealed that the US economy shrank,” said analysts at the John Hall Associates consultancy in London. “Weakening demand remains the key driver with the release of monthly data for August revealing that US demand ran well below year-ago levels.” The US economy contracted at a 0.3 percent annualised pace in the third quarter as a global credit crunch saw consumers and businesses cut back on spending. The decline, not so steep as the 0.5-percent annualised drop expected by private economists, comes amid mounting expectations of a sharp falloff in the US economy amid the worst banking and financial crisis in decades. “Crude futures were lower (on Friday), under pressure from renewed demand concerns … after the EIA revised down its August US oil demand estimate by 8.4 percent year-onyear … its worse reading since 2001,” said
Sucden analyst Nimit Khamar. Prices have been under pressure as tumbling stock markets and recession fears darkened the outlook for energy demand. Prices Monday hit 59.02 dollars in London and 61.30 dollars in New York — the lowest levels for around 17 months — and are down more than 50 percent since July’s record highs above 147 dollars. The market rose briefly Wednesday after interest rate cuts in the United States and China
boosted expectations of higher demand in the world’s two leading energy consumers. Prices also found limited support after the OPEC crude producers’ cartel warned it could cut output further. OPEC Secretary General Abdalla Salem El-Badri said Tuesday it could slash output again if prices keep falling. OPEC produces
40 percent of the world’s crude oil. At an emergency meeting in Vienna last week, OPEC ministers agreed to reduce output by 1.5 million barrels a day to 27.3 million bpd from November 1 in an attempt to
prevent prices falling further. The cartel must cut at least another one million barrels from its oil supply in December or before December, Venezuelan Energy Minister Rafael Ramirez said.

 

Wynn profit rises 14 per cent in 3Q

Wynn Resorts said third-quarter profit rose 14 percent as increased gambling in Macau made up for declines in Las Vegas, Bloomberg reported.
Net income jumped to 51.1 million US dollars from 44.7 million US dollars, a year earlier, Las Vegas-based Wynn said in a Business Wire statement. Revenue gained 18 percent to 769.2 million US dollars, beating the 741.7 million US dollars average estimate of 13 analysts surveyed by Bloomberg.
The results may signal that billionaire Stephen Wynn's company, with its high-end gambler reputation, has seen business deteriorate less than his rivals. Gambling revenue on the Las Vegas Strip has declined for eight straight months. Wynn set aside more money to cover bad loans made to gamblers in the weakening economy.
“They're not bullet-proof, but probably better positioned than most”, Joel Simkins, an analyst at Macquarie Securities USA Inc. in New York, said before the results were released to Bloomberg.
The three biggest US casinos — Wynn Resorts, MGM Mirage and Las Vegas Sands Corp. — have lost more than half their stock market values on investor concern that the frozen credit markets will jeopardize the multibillion-dollar development projects they're all planning, the report added.
Wynn said its casino resort Encore Las Vegas is still scheduled to open next month as planned. The 2.3 billion US dollar property is fully financed, it said. The company expects to open its 700 million US dollar Encore Macau in the first quarter of 2010.
Las Vegas Sands' third-quarter earnings before interest, taxes, depreciation and amortisation and other items, or adjusted Ebitda, fell to 70.1 million US dollar in the third quarter, from 93.2 million US dollars, as it held less bets and increased its bad debt reserve by 11.1 million US dollars.
At Wynn Macau, adjusted Ebitda rose 15 percent to 106.3 million US dollars, from 92.8 million US dollars a year ago. Wynn boosted its bad debt reserve there by 11 million US dollars.
This year, Wynn's Ebitda “made slightly more of an increase in China than the decrease in Las Vegas”, Steve Wynn said on a conference call with analysts. “As we go into these last 60 days, we've got a few million dollar cushion to end up sort of like last year”.
Wynn Las Vegas “fared better than most'' in the third quarter, the division's President Andrew Pascal said on the call. Revenue fell 3.5 percent to 6 percent through September, and there was more “significant softening” in October, he said.
“I think that right now Las Vegas is seeing pretty much some of the worst of it”, Steve Wynn said. “People will relax and return to their habits, sooner I think than later”.
The company's earnings in Macau were boosted by a 36 percent jump in gambling by VIPs, defined as those who spend at least one million patacas each visit. Wynn won 3.1 percent of the 13.3 billion US dollar gambled at its Macau VIP tables, up from 2.96 percent of the $9.8 billion bet a year earlier.
Wealthy gamblers, who are ferried to casinos by junket operators for a commission from the chips they bet, accounted for 67 percent of Macau's total gaming revenue last year, up from 63 percent in 2006, according to the city government.
Macau “showed some weakening”, the unit's President Ian Coughlan told analysts. With last month rebounding, “we're looking towards the rest of the year being off a little bit, but not too consequential”, he said.
Mass-market gamblers bet 20 percent more at Wynn's Macau tables, and the casino won 20.3 percent of the 568.8 million US dollars they wagered.
Wynn Resorts opened the Wynn Macau casino in September 2006 and is developing the Diamond Suites, scheduled to open in 2010, and a third Macau casino.
The revenue Wynn gets for each available room at Wynn Las Vegas, a measure of rates and occupancy called Revpar, fell 4 percent in the quarter, to 261 US dollars.
Wynn Las Vegas slot machine gambling dropped 12 percent to 853.8 million US dollars in the third quarter. Table game betting climbed 12 percent to 531 million US dollars, while the casino “hold”, or the amount the company keeps, fell to 24.3 percent of the amount gambled from 26.4 percent.
Growth in Macau has slowed since China increased visa restrictions on some mainland residents travelling to the SAR. Casino gambling revenue there fell to 26 billion patacas in the third quarter from 28.9 billion patacas in the second.
Macau accounted for more than half of Wynn's revenue last year, up from 21 percent in 2006, according to data compiled by Bloomberg.

Archives