China Keeps Oil’s Cash Spigot Open

 

We’re gonna need a bigger wrench.

Closing off the spigot of capital to the oil industry is proving tougher than expected. QEP Resources on Monday became the latest U.S. exploration and production company to issue a sack of new shares to shore up its finances. Despite the miserable oil price and worries about looming bankruptcies, this could end up being the best quarter for U.S. E&P stock sales on record.

Still, QEP’s $330 million pales in comparison to the $10 billion that China Development Bank is lending to Petrobras, Brazil’s struggling, scandal-plagued national oil company. And besides the bigger check, there is something else about this deal with big implications for the central question in the oil market: When will prices spike again?

Petrobras needs the money. Having scotched the development of the biggest oil bonanza outside of shale — namely, Brazil’s offshore “pre-salt” resources — Petrobras has incurred huge debts just in time for the price crash.

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