Tag: news

Authored by Nick Cunningham via OilPrice.com,

Oil prices crashed through zero, closing out the day at -$37 per barrel, an unprecedented meltdown (only to rip back to zero tonight)…

There are mitigating circumstances to these insane numbers. The prices for WTI reflect the contract for May, which expires this week. The collapse is a reflection of traders abandoning the May contract, and moving on to June. The thinly-traded May contract loses some relevance, and analysts say that the June contract – trading at $20 per barrel as of Monday – now becomes the important number to watch.

But now June is collapsing too…

Nevertheless, it is hard to ignore the historic numbers flashing across the screen. As futures contracts expire, they tend to converge with the realities of the physical market. Prices went negative because the physical market in Oklahoma and Texas is so overwhelmed. OPEC+ did agree to historic production cuts, but not for April. In any event, the cuts pale in comparison to the decline in demand. But taken together, the effects of the price war on the supply side are colliding against the depths of demand destruction at the same time.

The result is really ugly. Nobody wants physical delivery of WTI for May, and with storage options dwindling in some places, traders liquidated their positions, selling contracts at crazy discounts. With the contract expiring on Tuesday, nobody wanted to be left holding the bag. Unable to actually accept physical delivery, traders ended up paying someone to take oil off of their hands. Surely, some fascinating reportage will be written about the last guy that got stuck with an unwanted May contract.

“The intraday WTI destruction today is certainly epic in scale, which is largely a case of jitters ahead of the WTI May 2020 futures contract expiring tomorrow and storage fears finally materializing,” Louise Dickson, Oil Market Analyst at Rystad Energy, said in a statement.

“But if you have been watching the physical spot prices in the North Sea, currently trading in the $15-18 range, this drop in WTI May 2020 futures isn’t as shocking.”

On the one hand, the negative pricing will be chalked up to a weird one-off glitch, a confluence of historic firsts due to a price war, pandemic and downward economic spiral. The bizarre development may quickly be forgotten as traders move on to the June WTI contract, which is trading at $20 per barrel. But while June doesn’t appear quite as catastrophic, oil at $20 is not a price at which most oil companies can survive for any lengthy period of time. Moreover, there is no reason to think that $20 is the floor.

The second quarter is “likely to be the most uncertain and disruptive quarter that the industry has ever seen,” Schlumberger CEO Olivier Le Peuch, said on the company’s earnings call last week.

On Monday, Halliburton also offered a grim outlook for the oil market.

“We expect activity in North America land to sharply decline during the second quarter and remain depressed through year-end, impacting all basins,” Halliburton’s Chief Executive Officer Jeff Miller said in a statement. The oilfield services giant reported a net loss of $1 billion in the first quarter.

The oil rig count dropped by another 66 last week, another steep reduction. The Permian basin lost 33 rigs. Production declines have already started, but more shut ins are necessary in the short run as spot prices come under tremendous pressure.

Ultimately, the market continues to be at the mercy of the pandemic. Several billion people are living under some version of a lockdown. The hits keep on coming. Demand for road fuels in India has plunged by 50 percent, for instance. Analysts have repeatedly revised oil forecasts, with an increasing recognition that the shock to demand will be lengthier than previously expected. In April, at least, demand will be down by 29 million barrels per day (mb/d).

Those staggering figures may not be quite as large in May and beyond, but there is little chance that global demand bounces back to 100 mb/d anytime soon, if ever.

Mark Lewis, global head of sustainability research at BNP Paribas Asset Management, argues in the FT that we may have just witnessed the permanent peak in oil demand.

Greater efficiency, more EVs and also permanent changes in behavior stemming from the pandemic could add up to a peak in consumption.

Summary:

• Singapore extends lockdown until end of June, longest in the world
• Demonstrators fill the streets of Paris
• Yonhap denies reports that NK’s KJU is dying

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After a day of historic insanity in the American oil market, the Brent international oil benchmark is down more than 40% already Tuesday morning as investors continue to digest reports from late last night that North Korean leader Kim Jong Un might be in critical condition (a Trump Administration source said ‘yes’ while South Korea’s Yonhap said ‘no’) and a Tweet from President Trump that he would be “suspending” immigration into the US due to the coronavirus. The news prompted a whipsaw in equity futures late last night.

While liberals lose their minds, it’s worth remembering that immigration into the US is already effectively shut down. Refugee resettlement has been put on hold, visa offices have been shuttered, and citizenship ceremonies have been put on hold. CNN said it’s unclear how this will impact green-card holders.

In light of the attack from the Invisible Enemy, as well as the need to protect the jobs of our GREAT American Citizens, I will be signing an Executive Order to temporarily suspend immigration into the United States!

— Donald J. Trump (@realDonaldTrump) April 21, 2020

Meanwhile, in the latest indication that nobody really knows what’s going to happen with this outbreak, Singapore announced just minutes ago that it will extend its mandatory stay-at-home order until June, making Singapore’s lockdown the longest currently on record.

Singapore’s Straits Times reported that, in a televised national address, Singapore’s leader PM Lee Hsien Loong said that after yet another record jump in new cases – an outbreak that has been tied to camps of migrant workers who represent a ‘forgotten class’ in Singapore society – his government has decided to extend the densely-populated city-state’s lockdown for another month until June, making Singapore’s the longest lockdown extension in the world.

The city-state reported another 625 new cases on Tuesday, bringing its total case number to 7,213 according to BNO News.

While Lee insisted that Singapore’s ‘circuit breaker’ – don’t call it a lockdown – has been effective at suppressing the spread, Lee stressed that Singapore cannot be complacent, and that the number of “unlinked” cases has been stubbornly high, suggesting a “hidden reservoir” of cases in the community still.

Singapore was praised for its rapid and intense methods to combat the outbreak, rolled out back in February when the virus first started to spread outside Wuhan and mainland China. Among its toolkit was a protocol that required a team of investigators to trace contacts of newly positive patients within 2 hours to prevent further spread.

 But the big flaw was that Singapore overlooked the densely populated camps of migrant workers who typically fill the lowest level of jobs in Singaporean society. The second round of Singapore’s outbreak has been largely centered around these camps, with thousands of migrant workers becoming infected.

During Lee’s fourth national address to the nation since the virus emerged, the PM explained that the current measures would remain in place until May 4, at which time the city-state will start trying to slowly reopen society, using some of the same cautious criteria adopted by New Zealand and Germany.

To accomplish this, workplaces will be closed to further reduce the number of workers keeping essential services going. Some hot spots, such as popular wet markets, remain a problem, as large groups of people continue to congregate there, Lee said.

Lee noted that while there will be some “privacy concerns”, ramping up contact tracing via the “TraceTogether” contact tracing app – which all residents of Singapore have been asked to download – is a critical priority for the government as it moves to stamp out the virus.

“There will be some privacy concerns, but we will have to weigh these against the benefits of being able to exit from the circuit breaker and stay open safely.”

And as far as migrant workers are concerned, Lee promised that “we will take care of you like we take care of Singaporeans.”

Roughly one-fifth of the world, led by India, is starting the painful process of reopening. And countries that are refusing to start lifting some restrictions are facing growing unrest, including in France, where protesters poured into the streets of Paris to protest the lockdown and alleged mistreatment of minorities under lockdown conditions.

In the first two weeks of the Trump administration’s Paycheck Protection Program (PPP) for small businesses crushed by coronavirus, the credit spigot was wide open. Still, it was not evenly distributed across the country.   

On a geographical basis, loan amounts for firms were approved at a very high percentage in Central, Midwest, Rust Belt, and Southern states, compared with lower numbers for coastal ones. 

Bloomberg notes the findings were calculated via Evercore ISI estimates of eligible payrolls in each state, suggests the $342 billion of Small Business Administration (SBA) loans were ‘unevenly distributed’ in the first two weeks of the program ending on April 16. 

The disparity between individual states was evident in New York. SBA loan approvals were as low as 23% on April 13, while other states had a higher degree of approved loans for small firms. Then right before the fund ran out of money, approved loans in the state jumped to 40% from 23%. This phenomenon was also seen in California. 

Ernie Tedeschi, the Evercore analyst responsible for computing the available payroll figures, noticed hard-hit states with early lockdowns saw firms have the most trouble in arranging rescue loans.

Tedeschi said some companies in hard-hit states did not apply for the loans because it wouldn’t be impactful. He added that some firms received loans much quicker in some states because they had better relationships with community banks. 

Judging by the distribution of the loans on a state by state basis, one thing is evident: it appears Republican states were favored to a higher degree than Democratic states, which was noticed by Jackie Speier, a Democratic congresswoman from California, who tweeted last week: 

“I’m hard-pressed not to think that this is political,” Speier said. “Blue states like California got a pathetic number of loans.”

Democrats have found something else to b*tch at — not just President Trump’s virus response… 

Authored by Paul Joseph Watson via Summit News,

Amidst an investigation into the question of whether Spain’s draconian lockdown laws are constitutional, people are being fined a whopping €2,000 euros for “disrespecting” a police officer.

 

Unlike other European countries, people in Spain aren’t even allowed to go out to exercise during the coronavirus quarantine.

Citizens are only allowed to visit their nearest grocery store and only one person can be in a vehicle at a time unless the other person is classed as “vulnerable” or there is a medical emergency.

The lockdown is enforced via a network of roadblocks at which drivers are quizzed as to their intentions by aggressive police, some of whom carry guns. A physiotherapist was hit with a €600 euro fine for going to see a client after police stopped him when he was driving home.

The €2,000 euro fine for “disrespecting” a police officer is obviously completely arbitrary and easily open to abuse as a form of revenue generation.

“The guidelines state a standard €601 penalty for unauthorized movement outside the home without good reason that can be increased to up to €2000 if the offender responds with an “inappropriate attitude” to law enforcement officers, reports the Local.

No nos gusta
No es lo que queremos
Pero la irresponsabilidad nos daña a todos #QuedateEnCasa pic.twitter.com/OQG2lOO1hJ

— Policía Nacional (@policia) March 21, 2020

People who cannot provide identification to police are fined €700 euros, while a trip to a second home earns a €1500 euro fine. The biggest fine – a gargantuan €10,400 euros – is reserved for anyone who attempts to “to organize or participate in a gathering, party or celebration.”

According to journalist Jason O’Toole, who is locked down in Madrid, tensions are “running high” and people are now being arrested for going out “too frequently” to the grocery shop.

This has prompted some judges, solicitors, law professors, and NGOs to complain that the onerous fines are “unconstitutional.”

“There’s an investigation now underway by the Defensor del Pueblo (Spanish Ombudsman) to see if the fines are “correct and proportional,” because they want to “protect the rights of the citizens.” It’s a move that has even been welcomed by La Abogacia del Estado,” writes O’Toole.

“The Ministry of Justice is now questioning whether the fines are legally sound and says it’s possible many cases could be thrown out of court on a technicality. They say, for example, those apprehended might get off scot-free if the police didn’t first give them a formal warning – like a yellow card in football.”

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