Cullen/Frost Bankers Chairman and CEO Dick Evans said Monday his stress test model looks for a $28 per barrel bottom for oil, and a historically low level of $40 per barrel out to 2020.
Energy loans make up for over 15 percent of Cullen/Frost’s total loan portfolio, and 9.8 percent of them are now considered problem credit. That’s up around 7 percent from the last quarter.
But Evans told CNBC’s “Squawk Box” he’s not worried.
“We’ve been working with our customers. They’re not over-leveraged. If they were, they’ve already dealt with it. They’ve gone to the [credit] markets,” he said. “We know the leverage is what kills a company.”
U.S. oil prices were losing more than 3 percent and dipping under $30 per barrel in early trading Monday, after tanking 8.1 percent last week. A meeting between OPEC producers Saudi Arabia and Venezuela on Sunday ended with few signs that steps would be taken to cut output.
“I thought $37 would take care of us [a year ago]. Now we’re doing a stress test at $28,” Evans said. While refusing to forecast oil prices, he did share what his model shows: “It won’t go over $40 from a stress standpoint out to 2020.”
While international producers may be reluctant to reduce output, Evans said, U.S. oil companies will continue to scale-back production, which he believes will help crude prices balance out somewhat.
makati1 on Tue, 9th Feb 2016 5:34 am
Guesses…
rockman on Tue, 9th Feb 2016 6:19 am
mak – Yes indeed. But it might be more sinister then a foolish guess. Hundreds of $milions are be made/lost in the oil futures market every month. I wonder back in 2011 what C/FB predicted the price of would be today.
Marvin Manley on Tue, 9th Feb 2016 9:28 am
Or worse, a bluff. Telling the other high price players they can outlast the market.
Kenz300 on Tue, 9th Feb 2016 9:49 am
Someone is selling their book….. talking up positions you have is standard for CNBC
Half of U.S. Fracking Industry Could Go Bankrupt as Oil Prices Continue to Fall
http://ecowatch.com/2016/01/18/fracking-industry-bankrupt/?utm_source=EcoWatch+List&utm_campaign=bddf330f10-Top_News_1_18_2016&utm_medium=email&utm_term=0_49c7d43dc9-bddf330f10-86023917
Plantagenet on Tue, 9th Feb 2016 12:24 pm
Another 4 years of oil glut and low oil prices will bankrupt not only US oil companies, but Russia, Venezuela, and some other Petro-States.
We’ll see a war before that happens.
Alpha9 on Tue, 9th Feb 2016 2:08 pm
Unless you ear is next to a Saudi King you know nothing.
Truth Has A Liberal Bias on Tue, 9th Feb 2016 6:16 pm
Saudi Arabia will be flat broke if oil stays at $40 until 2020. anytime soon before 2020 Venezuela will be a dystopian wasteland if oil stays st $40 so you can take their exports of the world market well before then. If global demand increases at 1.7 million barrels a day per year we can ad about 7 million barrels a day to demand by 2020. Declines in fields currently producing today will cause production decreases of several million barrels a day by 2020. By 2020 their will easily be a 10 million barrel per day supply short fall if new production isn’t brought on line. $40 till 2020? What a joke. The same guys who didn’t see the price crash coming are now telling you how long it gonna be here.
Apneaman on Tue, 9th Feb 2016 6:29 pm
Where’s the bragging now? Looks good on ya fucking cancer monkeys. People in my family are going broke from this and I’m loving it.
Low oil prices hollow out Calgary’s downtown core
Silent cubicle farms, abandoned offices and empty coffee rooms where bustling towers used to stand
“The heart of our city is hollowing out.
Gone are thousands of downtown white collar office jobs, as oil and gas companies cut employees and slash entire departments.”
http://www.cbc.ca/news/canada/calgary/caac-low-oil-empty-downtown-offices-1.3439316
Apneaman on Tue, 9th Feb 2016 6:35 pm
Oil down 8 percent on gloomy U.S., global demand outlooks
“Oil prices slid for a fourth straight session on Tuesday and teetered close to 12-1/2-year lows hit last month, after weak demand forecasts from the U.S. government and the western world’s energy watchdog, while weak equities also pressured prices.”
http://www.reuters.com/article/global-oil-idUSKCN0VI03E
Boat on Tue, 9th Feb 2016 6:54 pm
apeman,
“Where’s the bragging now? Looks good on ya fucking cancer monkeys. People in my family are going broke from this and I’m loving it”.
You just have a weird mental outlook as many doomers do. As well as thinking there will be a crash you want it to happen soon. You want large groups to suffer. You a strange thang there ape.
Apneaman on Tue, 9th Feb 2016 7:20 pm
Das Boat, since when do Americans care about large groups of people suffering? The majority of America’s prosperity is founded on large groups of people suffering. Mostly non white people. The industrial revolution was financed by slavery. Almost no one except those suffering seemed to mind then. Tell us boat how it’s “just capitalism” or any one of your deep remedial philosophical notions. The people going broke is Calgary? It’s just capitalism Boat. America turning into a 3rd world shit hole? It’s just capitalism Boat. See, I love capitalism and that is why I cheer for it. What kind of fair weather capitalist are you boat – shunning the not so pleasant parts (majority now)? Great suffering has always been a major feature of capitalism. Show your loyalty to our master boat and embrace him in ALL his wonder and fury.
Boat on Tue, 9th Feb 2016 7:52 pm
apeman,
We are a nation of immigrants.The first generation or two always suffer. Then their families do ok. The US now has 13% /40 million foreign born residents. They come here for the future of their children.
“The industrial revolution was
financed by slavery. Almost no one except those suffering seemed to mind then”
This is more idiotic blather. Of course those people suffered. Children in industry suffered. Indentured servants suffered. America is not turning into a third world. The poor get fed. They have access to a state of the art medical emergency room, education for kids etc
There is enough wrong about America you don’t have to lie or exaggerate.
Like everywhere in the world.
Apneaman on Tue, 9th Feb 2016 8:03 pm
Boat is it at all painful going through life as an idiot? I guess when one is too stupid to know they are stupid they can feel no shame when constantly embarrassing themselves with their utter lack of knowledge.
Enslavement and Industrialisation
“Consumers and slaves
Slave-owning planters, and merchants who dealt in slaves and slave produce, were among the richest people in 18th-century Britain. Profits from these activities helped to endow All Souls College, Oxford, with a splendid library, to build a score of banks, including Barclays, and to finance the experiments of James Watt, inventor of the first really efficient steam engine.
Liverpool merchant bankers, heavily involved in the slave-based trades, extended vital credit to the early cotton manufacturers of its Lancashire hinterland. West Indian planters built stately homes – some, ridiculously extravagant dwellings such as William Beckford’s Fonthill – and furthered the modernisation of British agriculture by ‘improving’ their estates. Others invested in canals. And, of course, many spent their ill-gotten gains on gambling, prize fights and riotous living.
The plantations were themselves by-products of a new economic system. Plantation slavery thrived thanks to a consumer revolution that took place in Britain and the Netherlands in the 17th century. In these countries, consumer markets widened as farmers and manufacturers hired wage workers as the best way to expand output and sales.
The fact that farmers had to pay rent, and that labourers needed a job if they were to feed their families, was the germ of a new economic system – what we now call capitalism.”
http://www.bbc.co.uk/history/british/abolition/industrialisation_article_01.shtml
makati1 on Tue, 9th Feb 2016 8:07 pm
“We assume $40 crude out to 2020”
Assume: Ass-U-Me…. LOL