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The Canadian oil sands became one of the lowest-cost plays in North America
The use of giant shovels, driverless vehicles and a robot that looks like a dog have helped Canada's Oil Sands companies, including Imperial Oil and Suncor, become some North America's low-cost oil producers. This has been achieved despite the fact that U.S. Shale costs rose due to the highest inflation rates in decades. Canada's oil sands sector is in a strong position as the global oil market enters a downward spiral due to economic uncertainty caused by U.S. Tariffs and OPEC+ pumping out more barrels. International oil majors such as BP, Chevron, and Total sold their oil sands interests after the 2014-15 oil price crash. The Canadian operations were viewed as one of their most expensive and, therefore, less profitable projects around the world. They allocated their capital towards cheaper oil production and preferred U.S. shales for their quicker drilling times and higher returns. According to industry insiders, and an analysis of recent U.S. company earnings and Canadian company earnings, since then, new technologies and cost-cutting initiatives have led to meaningful improvements in the industry's competiveness, making oil sands one of the cheapest producers. U.S. oil companies have responded to the drop in oil prices by reducing rigs and capital expenditures as well as laying off employees. However, Canadian oil sands companies, due to their position of strength, have not made any changes to production or investment plans. As part of an effort to boost the Canadian economy, some politicians have called for a new pipeline to transport crude oil from Alberta to Pacific coast. Cenovus CEO Jon McKenzie stated in an earlier interview that the lower crude oil prices have had little impact on Canada's oil sector. He said that the industry has grown more resilient over time. Two four-legged robots, each named Spot due to their canine-like appearance, prowl Imperial’s 45-year old Cold Lake facility in Alberta. They perform routine equipment inspections and maintainence such as heat exchanger optimizing and oil/water interface monitoring. Spots allow Imperial to save CDN$30 ($22) million a year and free up workers for other tasks. Exxon's Imperial and Suncor, a competitor of Imperial, have both switched to autonomous vehicles to transport ore from oil sands. Imperial said that the switch had increased oil production productivity at its Kearl oil-sands mine in Alberta by 20% since 2023. Suncor's Fort Hills operation, north of Fort McMurray in Alberta, operates a truck weighing 900 tonnes, which is, according to the company, the largest hydraulic mining shovel in the world. Suncor CEO Rich Kruger stated that the shovel’s larger bucket and stronger digging force result in faster ore loading, and less spillage. Oil sands companies have also improved equipment reliability and performance. Imperial, for instance, has cut costs associated with turnarounds - an industry term for costly maintenance periods that require temporary shutdown of production - by CDN$100m annually at Kearl since 2021. The company aims to increase the interval between turnarounds to 48 months. Suncor attributes efforts such as standardizing maintenance across mines, and improving site water management to get more output out of existing assets to its US$7 reduction per barrel in the West Texas Intermediate (WTI), break-even price by 2024. The company now expects to achieve this at $42.90. According to Bank of Montreal, Canada's five largest oil sands firms can achieve break-even and maintain dividends at WTI prices of between $43.10-$40.85. This means that oil sands companies have reduced their costs by about $10 per barrel over the past seven years. According to BMO, oil sands averaged $51.80/bbl from 2017 to 2019. A recent Dallas Federal Reserve study of more than 100 oil and gas firms in Texas, New Mexico, and Louisiana found, on the other hand, that shale producers require an average WTI oil price per barrel of $65 to drill profitably. In 2017-2019 the break-even price for U.S. oil shale producers was between $50 and $52 a barrel. High Start-up Costs but Long Lifespan The nature of the extraction is a major reason why the oil sands sector has become so competitive. In some places, the process of extracting the oily sands in Alberta is more like mining than oil drilling. Companies operate huge mines to remove huge quantities of sand, clay, and oil from the area where the oil is close to the surface. Steam is used to loosen deposits underground and then a drilling method is used when the oil deposit is deep. Oil sands mining has high initial costs, but can be operated for many decades at very low rates of production decline. Canadian Natural Resources had, by the year 2024, proved and probable reserves of 20.1 billion barrels equivalent oil in its portfolio. This gave its oil sands upgrading and mining assets a lifespan of 43 more years. The Horizon oil sands mining operation has been in production since 2009. Shale oil, on the other hand, has low startup costs. The oil production from these wells begins to decrease within a few months. After years of drilling, the top shale field has been exhausted. Drillers have moved onto secondary areas and are drilling more wells in order to get the same amount of output. This has pushed up prices. Canadian oil sands firms have also reduced their debt over the last five years. This has allowed them to redirect profits from improving balance sheets towards dividends and share buybacks. Bank of Montreal reports that oil sands companies Canadian Natural Resources (CNR), Suncor, Cenovus Imperial Oil, MEG Energy and Cenovus have a combined net debt of C$33.9billion, excluding any lease obligations, after they paid down almost C$22billion in debts between 2021-2024. Kevin Burkett, Portfolio Manager at Vancouver-based Burkett Asset Management, says that Canadian oil sands producers offer increasing returns for investors looking to profit from the energy sector. Burkett, whose portfolio includes Canadian Natural Resources, Cenovus, said that Canada's oil-sands are "not geopolitically dangerous" and have "some very attractive characteristics in terms of productivity and cost."
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Copper prices fall as concerns about disruptions subside and inventories increase
Prices of copper fell on Wednesday, as concerns about supply disruptions eased and inventories increased amid uncertainty over the impact of U.S. Tariffs. The benchmark three-month price of copper at the London Metal Exchange fell 0.4% to $9,610 per metric tonne at 0945 GMT. This is down from a peak reached on July 2 that was just above $10,000. Nitesh Sha, commodity strategist at WisdomTree, said that there haven't been additional supply disruptions pushing prices higher on the different exchanges. One of the protest leaders said late Tuesday that the blockades had been lifted in Peru, which is the third largest copper producer in the world. The blockades had blocked a major transit route for copper for over two weeks. Rio Tinto reported a 9% increase in quarterly copper production on Wednesday and predicted full-year output at the upper end of their guidance range. The announcement of 50% tariffs on August 1 has led to a reduction in the flow of copper into the U.S. The inventory drain from Shanghai and the LME has almost stopped and plateaued. "You're beginning to see a building up in both locations," Shah said. LME Copper Stocks Data showed that the number of tons gained in the last two-and-a half weeks had risen by a third. U.S. Comex Copper Futures fell 0.9% to $5.53 a lb. This brings the premium of Comex over LME Copper to $2,579 a tonne. Investors also digested data Tuesday that showed China's economic growth slowed down less than expected during the second quarter. Shah stated that the GDP print was slightly above target and therefore, there is no need for any additional stimuli. This could potentially limit copper prices. The Shanghai Futures Exchange's most traded copper contract increased 0.1%, to 77.980 yuan (10,865.11) per ton. Other metals include LME aluminium, which fell by 0.4% to 2,571 per ton. Nickel also dropped 0.7% to 15,045; zinc shed 0.5% at $2,683.50; lead slipped 0.6% to 1,985.50; and tin declined 0.1% to 33,295.
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Gold prices rise on weaker dollar data; US PPI data is in focus
On Wednesday, gold gained due to a weaker dollar. Investors awaited clarity in trade talks between the U.S. As of 0910 GMT, spot gold was up 0.6% to $3,341.29 an ounce. U.S. Gold Futures climbed 0.3% to $3,348.20. Gold is now cheaper for those who hold currencies other than the U.S. Dollar. The dollar is currently easing before the U.S. PPI report as traders are cautious after recent gains. This has led to a slight increase in gold, according to Ross Norman, an analyst. In June, U.S. Consumer Prices increased the most in the last five months, mainly due to higher prices for certain goods. This indicates rising inflation, and may cause the Fed to delay its rate-cutting plans until September. At 1230 GMT, the U.S. Producer Price Index (PPI) is due. On Tuesday, Donald Trump said that the U.S. will impose a tariff of 19% on goods coming from Indonesia as part of a new deal with the Southeast Asian nation and there would be more deals in the future. He also revealed details about planned duties on pharmaceuticals. The Trump administration has struck a few deals so far, but the deadline for the increase in duties on U.S. imports is August 1, which will be looming. Ajay Kedia of Mumbai-based Kedia Commodities said that the gold market had rejected the $3400 mark several times, despite Donald Trump’s latest tariff update. In a low rate environment, gold, which is traditionally viewed as a hedge to economic and political uncertainty, thrives. ANZ stated in a report that "in the short-term, gold prices are likely to consolidate, before staging a rally towards $3,600/oz at year's end." Silver spot gained 0.8% per ounce to $38.01. Platinum increased 0.4% to 1,377.85 while palladium dropped 0.8% to 1 196.14. (Reporting by Anushree Mukherjee in Bengaluru)
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Ford recalls 694,000 cars in the US following a year-long fuel leak investigation
Ford has recalled 694,271 cars in the United States because of a fuel leak that could increase fire risk, according to the U.S. National Highway Traffic Safety Administration. According to the NHTSA report, in vehicles that may be affected, a fuel injection system could crack, causing fuel to leak into the engine compartment and possibly cause a fire under the hood. Ford's internal committee first reviewed the problem in March 2024. They suggested an update to engine control software and installation of drains as a solution. Ford said that the affected vehicles had a 1.5L motor. The committee didn't recommend that the fuel injectors be replaced if they were defective. The recall at the time only covered about 42,000 cars. The NHTSA launched a recall inquiry a month later to assess the effectiveness of Ford's solution. They also noted that Ford's fix was not addressing the root cause. Ford announced earlier this month, after re-evaluating the problem, that it found cracked fuel injectors on eight vehicles that had experienced underhood flames despite being repaired. Six of the eight vehicles did not have the engine software that Ford had recommended previously. Ford has also approved a recall of vehicles previously affected, as well as those equipped with the 1.5L engine. A revised remedy is currently being developed. The auto safety organization said that the latest recall affected certain Bronco Sport models from 2021-2024 and Escape models from 2020-2022, among others. It estimated that 0.3% all vehicles recalled have the defect.
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Trump's Trade War: Major Developments
The tariffs imposed by Donald Trump since his inauguration on January 20, 2017 have sent shockwaves through financial markets, and uncertainty has spread throughout the global economy. This timeline shows the major events: Trump imposes tariffs of 25% on Mexican imports, 10% on Chinese goods and most Canadian imports. He demands that they reduce the flow of illegal immigrants and fentanyl into the U.S. Trump accepts a 30-day suspension of his threat to raise tariffs on Mexico and Canada, in exchange for concessions made on border security and criminal enforcement. The U.S. fails to reach a similar agreement with China. Trump increases tariffs on aluminum and steel to 25%, "without any exceptions or exclusions". March 3 - Trump announces that 25% tariffs will be imposed on imports from Mexico and Canada from March 4, and that all Chinese imports will face a 20% tariff on fentanyl. March 6 - Trump excludes for one month goods from Canada and Mexico as part of a North American Trade Pact. Trump announces a 25% import tariff on cars and light trucks. Trump announces global duties with a base of 10% on all imports, and much higher duties for some of the United States’ biggest trading partners. Trump suspends most of the country-specific tariffs he had imposed less than 24 hours before, after a financial market upheaval that wiped out trillions of dollars on bourses worldwide. The 10% blanket duty on nearly all U.S. imported goods remains in place. Trump has announced that he will increase the tariffs on Chinese imports from 104% to 125%, which was the level in effect the day before. The extra duty on Chinese goods is now 145% including the previous tariffs. May 9 - Trump announces a limited bilateral agreement with British Prime Minister Keir starmer that keeps British export tariffs at 10% and reduces U.S. duty on British auto exports. On May 12, the U.S. & China agreed to temporarily reduce reciprocal tariffs. The U.S. and China agree to temporarily reduce reciprocal tariffs. May 13: The U.S. reduces the "de minimis", or low-value tariff, on China shipments. Duties for items up to $800 are reduced to 54% instead of 120%. Trump announces on May 23 that he will recommend a tariff of 50% on all goods imported from the European Union, starting June 1. Two days later, he backtracks on his threat. He warns Apple that it will face a 25% tax if the phones it sells in the U.S. are manufactured outside the country. May 29: A federal appeals Court temporarily reinstates Trump's most comprehensive tariffs. It suspends an earlier ruling by a lower court to allow the government to appeal. Trump signs an executive order activating the increase in steel and aluminum tariffs from 25% to 50% on June 3. Trump warns that he could soon increase auto tariffs. Trump announces a 20% tariff for many Vietnamese exports. Trans-shipments through Vietnam from other countries will be subject to a 40% tax. Trump said on Truth Social, July 6, that countries who align themselves with BRICS' "anti-American policies" will be subject to an additional 10% tariff. Trump announces on Truth Social that the higher additional duties announced earlier in the year will be implemented with a slight delay, on August 1. In letters to 14 countries, including Japan, South Korea, and Serbia, Trump says the tariffs will range between 25 and 40 percent. Trump announced on July 10 that the U.S. would impose a tariff of 35% on Canadian imports in August, and planned to impose tariffs blankets of 15% or 20 % on most other trading partner. Trump threatens to impose 30% tariffs on imports from Mexico, the EU and Canada from August 1. Trump announces that the U.S. is imposing a tariff of 19% on Indonesian goods under a new deal. (Compiled in Gdansk by Paolo Laudani, Mateusz Rabiega, and Matt Scuffham; edited by Jamie Freed and Lincoln Feast)
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European stocks are mixed as they await more U.S. inflation figures
Investors were cautious on Wednesday as European stocks were mixed after U.S. data from the previous session suggested that tariffs are causing inflation. This led investors to reduce their bets for rate cuts, and tariff-related uncertainties kept them cautious. Wall Street fell on Tuesday night and U.S. Treasury rates rose as U.S. Consumer Price Data for June showed higher prices for certain goods. The U.S. Tariff Threats also affected the market sentiment, after President Donald Trump said on Tuesday that letters informing smaller countries about their U.S. Tariff Rates would be sent out shortly. Trump announced on Saturday that he would impose a 30 percent tariff on imports coming from Mexico and Europe starting August 1. The MSCI World Equity Index was down by 0.1% at 0835 GMT. It had been knocked from a record high in the previous session following the inflation data. The pan-European STOXX 600 fell by 0.2%, while London's FTSE 100 rose by 0.1%. The rate of inflation in Britain's consumer prices rose unexpectedly to its highest level in more than a year. After the data, the pound gained a little against the dollar. The traders will monitor the U.S. Producer Price Data, which is due on Wednesday to determine the extent of inflationary pressures. Vas Gkionakis is a senior economist and strategist with Aviva Investors. It is very likely, but we will have to wait to see when and how it happens. The Fed has kept interest rates at the same level as it waited to see if the tariffs would have an inflationary effect, something that Chair Jerome Powell said he anticipated in the summer. Traders bet that the Fed is going to start cutting interest rates in September. Trump has repeatedly attacked Powell for not reducing interest rates earlier, causing investor concerns about the central bank's ability to remain independent. The dollar index, which was at 98.538 on Wednesday and little changed for the day, had cooled down after hitting multi-week highs on Tuesday. The euro rose 0.2% to $1.1620. The benchmark yield on the 10-year German Bund was unchanged at 2.71%, while the yield on the 10-year U.S. Treasury was at 4.4833%. Both yields were down from their previous highs. Investors also pay attention to earnings reports. Goldman Sachs Morgan Stanley, and Bank of America are among the banks that will report earnings on Wednesday. Prices of oil rose on the back of expectations that summer demand in China and the United States will be high. Gold rose 0.5% to $3,339.70 per ounce.
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The Russian oil price has remained below the budget target for 2025
Calculations showed that the average Russian oil price in roubles remained below the budget target for 2025. This added pressure to a budget already facing a growing deficit. The weakness of the rouble is due to its strength, which has increased by around 45% in the past year as a result of the easing of geopolitical tensions. The dollar value of international oil prices has dropped by about 10%. Estimations show that the average price for Russia's oil mix, as calculated for taxation, was 4,701 Rubels per barrel during the first two weeks in July. This is about the same level as June, but 11.1% lower than the revised budget target. Last week, the finance ministry announced that the budget deficit had reached 3,69 trillion roubles (47.31 billion dollars), or 1,7% of the gross domestic product in the first six months of the year. This is the same amount as was expected for the entire year. In April, Russia increased the estimate of the budget deficit for 2025 to 1.7% from 0.5%. This was after it reduced the energy revenue forecasts by 24%. The state's spending on defence increased by a quarter to 6.3% in 2025, the highest level since the Cold War. This was due to the fact that the country is still fighting in Ukraine. Oil markets have been impacted by the economic uncertainty and the increased production of OPEC+ (the Organization of the Petroleum Exporting Countries) and its allies including Russia. The price of rouble oil is calculated using a Russian currency exchange rate of 78.39 to $1 during the first two weeks in July, and a barrel average of $59.97. The government has set a target price for oil in roubles of 5,281 per barrel, with a rate of 94.3 roubles to $1. Meanwhile, the price in dollars is set at $56.
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Data shows that Germany has seen record sales of e-cars in the first half of the year.
The German road traffic agency KBA announced on Wednesday that electric car sales had reached a new record in Germany in the first six months of this year. This represents nearly one out of five new registrations. According to the European Automobile Manufacturer's Association, sales of electric vehicles (EVs) in Europe are up significantly this year, despite a decline in total vehicle sales. Germany is among the fastest growing markets. Experts say that the growing interest in electric vehicles in Europe, which is the second largest EV market in the world, is largely a result of new EU emission standards and the introduction of cheaper electric models. The KBA reported that EV sales in Germany had reached 248,726 in the first half of 2025. This is up by 35% from 184,125 in the same time period last year, and beats the previous record in 2023. KBA reported that EVs accounted for 17.7% of all newly registered vehicles during the first half year. The total number of new vehicles registered between January and the end of June was 1.4 million, a drop by 4.7% compared to the same period in the previous year.
Trades to Make Europe Great Again are gaining momentum
Investors are recognizing that a more independent and less U.S. dependent Europe is emerging. These opportunities go beyond simply buying defence stocks.
There is good reason to be cautious, as the massive German expenditure on infrastructure and defence will not be felt for some time. Many are still playing the long-game.
Mark Dowding is the CIO of RBC's BlueBay Fixed Income team. He said that MAGA trades have now replaced MEGA trades. MAGA trades had lost their appeal. Mark was referring to President Donald Trump's Make America Great Again campaign.
DEFENCE FIRST
The German fiscal expansion and the Brussels plan to mobilize up to 800 billion euro ($866 billion) in rearmament means that defence stocks are still a fertile investment ground, even though they have risen since Russia invaded Ukraine 2022.
European aerospace and defense stocks are up 33% in the past year. The valuation multiples of these stocks now exceed those of their U.S. counterparts, reaching levels usually associated with high-tech or luxury goods.
This month, the tankmaker Rheinmetall briefly traded at a higher price than Ferrari, with a 44-fold multiple of its expected earnings. Investors are willing to pay more for this long-term trend.
Citi estimates that the average annual profit growth of defence companies is expected to range from 8% at BAE up to 32% at Rheinmetall by 2028.
It's not easy for the European Union to purchase more European weapons. Data from the European Commission shows that 78% of EU purchases have been made outside the EU since 2022. 63% went to the U.S.
Some caution after a large rally.
Markus Hansen, the Vontobel Fund Manager Markus Hansen believes that investors should concentrate on areas where there is a real and pressing need such as rebuilding depleted ammo stockpiles or infantry-related gear.
Defence supply chain companies and other sectors, including communications, could also benefit.
Eutelsat's stock has risen 260% in the last month on speculation that it could replace Elon Musk’s Starlink satellite to provide internet access to Ukraine.
Defence is not just about weapons. It's also about data, communication and logistics. Tomas Hildebrandt, portfolio manager at Evli, said that the value chain is a complex one where suppliers are important.
He said that examples could include the truckmaker Scania, Traton's Atlas Copco, which manufactures machinery for industrial and infrastructure projects, as well as construction companies.
Hey Bond
There will be more triple-A rated debts, whether they are joint EU bonds or German debt. This will help to maintain the status of the euro as a reserve currency.
The historic infrastructure and defense spending in Germany could amount to more than A
Additional debt of trillions of euros
Even the EU's supporters did not anticipate this move just a few months ago.
The SAFE bonds will add to the EU's debt of 650 billion euros.
This is a sign that the EU might be able to become a permanent borrower, as investors had long hoped. It would also mean it was ready to take on another challenge following its COVID-19 Recovery Fund.
However, the loans are only a small part of the 800-billion euro plan. The rest is left to the national governments.
3/ BINGING ON IT
The fiscal boost has brightened the economic outlook and European banks have surged by 26% in the first quarter of the year, their best since 2020.
Berenberg predicts that Germany's GDP will grow by roughly 1.4% between 2026 and 2027, after nearly four years of stagnation.
According to a March survey by BofA, the biggest sector overstretch in Europe is insurance and banks. Industrials are next.
Trevor Yates is a senior investment analyst at GlobalX and noted that the firm's DAX German stocks ETF has been receiving a lot of interest.
Investors expect European regulators to ease bank rules in light of the U.S. regulatory drive.
BlueBay Dowding stated that European bank capital bond were the firm's biggest overweight position in multi asset credit funds.
PERIPHERAL WINNS
Manish Kabra of Societe Generale's multi-asset strategist says that Spanish and Italian stocks are cheaper than those found in the core Europe. They could be poised to gain.
Southern European stocks also have a lower exposure to U.S. Tariffs than Germany and France, but they are heavily exposed to banks.
There are parallel developments. The German debt brake is one thing, but the MDAX (midcap) and the long euro are the other. "The two things that impact the banks are banking regulation and nominal GDP growth in Europe," Kabra explained.
The periphery provides exactly that.
5/ RENEWABLE
Analysts said that the push for Europe to become more independent in energy, starting 2022, will continue. Renewable energy and domestic power companies are expected to benefit.
The European Commission presented an Action Plan that aims to accelerate permits for renewable energy, change the way energy tariffs are calculated, and increase aid from state for cleaner industries and flexible power generation.
The German government plans to increase its spending by 100 billion euros, which will go towards climate and economic transformation.
Think tank Ember reports that solar generation will provide 11% of EU electricity in 2024 compared to 9.3% in 2030, and surpass coal.
Iberdola Endesa Enel, European utility companies have all rallied between 7-16% this year.
(source: Reuters)