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Imperial Oil (IMO) to Cut 200 Jobs as Coronavirus Hits Oil Demand

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Imperial Oil Limited (IMO - Free Report) recently announced that it will furlough nearly 200 of its 6,000 workers across Canada. Also, the company trimmed the headcount of contractors that it recruits by about 450 since the onset of this year. All these initiatives are part of the company’s cost-curbing measures due to weak crude prices.

The softness in oil prices and a decline in global demand due to the novel coronavirus outbreak are taking a toll on oil and energy companies. The companies are forced to delay their expansion plans and lower capital expenditures to preserve liquidity. Year to date, the crude oil price has dropped 25.3%, which is adversely impacting the performance of the oil and energy sector.

Further adding to the woes is the Canadian oil market’s status. Heavy Canadian crude, which usually trades at a discount to U.S. West Texas Intermediate oil price,is still under $35 per barrel.

The currently Zacks Rank #3 (Hold) Imperial Oil joins other Canadian energy companies including Cenovus Energy (CVE - Free Report) ,  Suncor Energy (SU - Free Report) and Husky Energy in strategically slashing jobs. These industry players aim to overcome the tough times while maintaining financial flexibility and operational excellence. Markedly, strengthening the companies’ capital positions during a phase when oil prices barely yield any profits for most producers, is touted to be a wise move. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Brief on Imperial Oil

Founded in 1880, Calgary-based Imperial Oil is one of the largest integrated oil companies of Canada, mainly engaged in oil and gas production, petroleum products refining, and marketing and chemical business.

Notably, Imperial Oil is the subsidiary of one of the world’s largest publicly-traded oil and gas companies Exxon Mobil Corporation (XOM - Free Report) , which holds 69.6% ownership stake. Last month, ExxonMobil announcedplans to reduce its workforce. In an email to its employees, the company’s chairman and CEO Darren W. Woods said that additional staff layoff is necessary as the energy business scenario remains challenging.

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