Oil income dives, stocks hold firm
May 13, 2009
There’s been a lot less cash flowing into the Norwegian treasury from the country’s oil industry so far this year, a result of lower prices for its biggest export product. Income from the country’s offshore natural gas resources, though, is still strong and an upturn for the Oslo Stock Exchange was continuing early this week.
The state agency that officially owns Norway’s own interests in its offshore oil and gas fields, Petoro, reported nearly a 17 percent decline in the amount of oil and gas income flowing into the country during the first quarter. Petoro reported cash flow of NOK 33.2 billion (about USD 4.7 billion) during the first three months of 2009, down from NOK 39.9 billion during the same period last year.
With oil prices roughly half what they were during the first quarter of 2008, the decline would have been much worse had it not been for gas prices that remain high. Production has also stayed relatively high.
Record-high oil prices in recent years had pumped up Norway’s economy to a level never seen before. When prices started falling last year, so did the local stock market because so many of Norway’s companies are tied to the oil industry. The ongoing finance crisis has also battered Norwegian shares, in line with those elsewhere.A recent rise in oil prices, however, has perked up the market. As reported earlier this week, the Oslo Stock Exchange has rebounded nearly 40 percent this spring and while some analysts warn of a looming “correction,” others are more optimistic.
“I don’t see any real danger of a correction right now, even though the possibility is always there,” Peter Hermanrud of First Securities in Oslo told newspaper Aftenposten on Wednesday. “I think it will keep moving up.”
It mostly depends on oil prices and what happens on Wall Street. The price for North Sea crude went up around 50 cents to USD 58 on Tuesday and that boosted shares in Norway’s largest company, StatoilHydro, by 1.4 percent. The main index of the Oslo Stock Exchange was up nearly a full percentage point, to 280.39.
There’s also been some good news on the local real estate front. Housing prices have shown some slight increases in recent weeks, and brokers are reporting heavy traffic at open houses. Several townhouses and single-family homes in Oslo have sold at prices above appraisal this month.