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Crude Oil Heads Lower; Stimulus Boost Fails to Last – Investing.com

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© Reuters.

By Peter Nurse 

Investing.com – Oil markets turned lower Wednesday, with a bounce caused by the hefty stimulus package agreed on Capitol Hill short-lived as investors revisit the specter of deepening demand destruction and massive oversupply.

AT 10:50 AM ET (1450 GMT), futures traded 2% lower at $23.52 a barrel, while the international benchmark contract fell 2.4% to $26.50. 

A bipartisan Congress managed to come to an agreement early Wednesday on a $2 trillion stimulus measure to try to bolster the U.S. economy as it shuts down to combat the coronavirus.

However, the positive tone generated by this bill didn’t last very long as large parts of the global economy remain shut down to stop the spread of the virus.

“Clearly the fundamental outlook for the oil market remains bearish, given the weakening demand picture and expected surge in supply from the start of 2Q20. We still expect prices to trade lower from current levels,” said analysts at ING, in a research note.

In the U.S. inventory data out this week, the government reported a smaller-than-expected build in crude stocks

rose by 1.6 million barrels for the week ended March 20, the EIA said. That compared with expectations for a build of about 2.8 million barrels, according to forecasts compiled by Investing.com.

fell by 1.5 million barrels, versus forecasts for a decline of about 660,000 barrels. fell by about 680,000 barrels, compared with expectations for a drawdown of 1.9 million barrels.

Talking about the supply situation, neither Saudi Arabia nor Russia show any sign of getting back to the negotiation table in order to curtail supply, in fact they look more likely to pump more oil to gain market share. 

“There’s a lot of oil in the market and there’s a lot of stocks we’re going to have to build because it’s not going to get consumed,” Vitol Chief Executive Officer Russell Hardy said in a Bloomberg Television interview on Wednesday. “Demand today we think is down significantly, 15 to 20 million barrels a day at its peak over the next few weeks.”

“The deepening contango in the ICE (NYSE:) Brent forward curve reflects the surplus environment, and the need for this surplus oil to be carried forward,” ING added.

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Trump Strikes Deal With Mexico To Help Cut Oil Production In OPEC Deal – OilPrice.com

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Trump Strikes Deal With Mexico To Help Cut Oil Production In OPEC+ Deal | OilPrice.com

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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    The United States is ready to help Mexico reach its production cut quota as part of the tentative OPEC+ deal, Mexico’s President Andres Manuel Lopez Obrador said on Friday, while the global pact to reduce production was in a kind of Mexican standoff early on Friday as Mexico was still balking at the large cuts it is asked to make.

    Lopez Obrador spoke with U.S. President Donald Trump on Thursday and the United States agreed to cut 250,000 bpd for Mexico to help it reach the 400,000-bpd cut OPEC+ is asking of it, the Mexican president said at a news conference on Friday, noting that he had informed OPEC+ of this development.

    OPEC delegates told Bloomberg, however, that they were not aware of details of a Trump-Lopez Obrador agreement about the U.S. helping Mexico to achieve the cuts. 

    On Thursday, during the OPEC+ video meeting, Mexico – part of the non-OPEC group of producers in the pact since 2017 – disagreed with proposals that it should reduce its production by 400,000 bpd from its October 2018 baseline.  

    Mexico walked out of the OPEC+ talks yesterday, and its Energy Secretary Rocío Nahle tweeted later that Mexico offered to OPEC to cut its production by 100,000 bpd for the next two months, as part of its contribution to support oil prices. Mexico was offering to cut its oil production from 1.781 million bpd in March to 1.681 million bpd, Nahle said.

    Apparently, OPEC+ was not pleased with Mexico’s refusal to cut more and said in its official release about agreeing to 10 million bpd cuts that the deal “is conditional on the consent of Mexico.”

    Even if the U.S. would really help Mexico reach the 400,000 bpd cut, it’s not clear yet how OPEC+ would see the total U.S. contribution to the deal during the G20 energy ministers’ meeting, ongoing at the time of this writing.

    The U.S. has argued that its oil production decline is happening naturally as a result of the free market (and very low oil prices), but the heavyweights in the OPEC+ group, and most of all Russia, has signaled it would accept only voluntary production cuts as a contribution to the global deal.  

    By Tsvetana Paraskova for Oilprice.com

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      Shaw suspends share buybacks amid economic uncertainty caused by COVID-19 impact – Business News – Castanet.net

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      Shaw Communications executives said Thursday that the Freedom Mobile service won’t meet its 2020 target for growing its subscriber base because the COVID-19 crisis has kept stores closed and customers distracted, but they said the lost revenue will be offset by lower operating costs during the coming months.

      The comments came in a conference call to discuss the Calgary-based company’s results for the second quarter, which ended Feb. 29, just prior to the official declaration of a global pandemic and unprecedented social-distancing measures designed to slow and reduce the spread of the novel coronavirus.

      The quarter also ended before Saudi Arabia began a global price war that dropped the price of crude oil, a major source of revenue for Shaw’s customers.

      “While we generally feel very comfortable that we can manage through this crisis, it is difficult, if not impossible to accurately or precisely predict the impacts on Shaw,” chief financial officer Trevor English told analysts.

      Like other companies across Canada, Shaw and Freedom have closed their retail stores in response to official demands to avoid or limit activities that could move the virus through the community by person-to-person contacts.

      English said that Freedom customers “are simply not making decisions to switch or alter their services during this time” and Shaw expects its wireline businesses will also experience “considerably muted” activity for “a period of time.”

      He said some of Shaw’s business and residential subscribers may select less expensive packages or cut some services amid “increased difficulty for some customers to pay their bills.”

      However, English said those lost revenues will be manageable given Shaw’s financial strength and the importance of its communications and entertainment services while most Canadians are conducting work and school from home.

      The company said it will preserve cash by suspending a share buyback program that had cost Shaw about $130 million as of the end of March, but it will continue to maintain its dividend payments to shareholders.

      During the fiscal second quarter ended Feb. 29, net income, revenue and free cash flow were up compared with a year earlier.

      Net income was $167 million, or 32 cents per share, up from $154 million or 30 cents per share; Revenue was up 3.7 per cent to $1.36 billion from $1.32 billion. And free cash flow, which is the amount of cash available after servicing short-term debt obligations, was up 20 per cent to $191 million.

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      Trump Has “Big Talk” With Putin, Saudi King Salman About Oil – OilPrice.com

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      Trump Has “Big Talk” With Putin, Saudi King Salman About Oil | OilPrice.com

      Irina Slav

      Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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      U.S. President Donald Trump said he had a “big talk” with Russian President Vladimir Putin and Saudi King Salman regarding oil production, expressing hopes that a deal on the control of said production would be announced soon.

      “We had a big talk as to oil production and OPEC and making it so that our industry does well and the oil industry does better than its doing right now,” Trump said as quoted by Reuters.

      It remains unclear whether the deal Trump mentioned would involve the participation of the United States: Reuters reported on the U.S. president’s statement after OPEC+ sources announced that it had reached an agreement in principle to remove 10 million bpd from global supply beginning in May.

      It remains to be seen how much everyone will cut. Initial reports from unofficial OPEC sources suggest that Russia and Saudi Arabia will both slash their production to around 8.5 million bpd.

      Following those unofficial reports that were trickling in, OPEC issued a press release, in which it said that all producers would be cutting from a baseline of their average for October 2018 except Russia and Saudi Arabia, “both with the same baseline level of 11.0 mb/d.”

      The cuts, according to the press release, would be effective from May, and taper down after June, but staying effective at some level through April 2022, to be reviewed in December next year. This is quite a long time for an agreement of this size, which indicates OPEC+ is finally taking the threat that the pandemic is to world oil economic activity and oil demand seriously. However, it may, as some warned, be too little too late.

      A cut of 10 million bpd, even if it is effective for two months, as planned, would not do much to relieve the glut, which according to estimates may have reached 30 million bpd. The group said it expected other producers to join in with cuts of another 15 million bpd, which would be better for excess supply and storage capacity. 

      By Irina Slav for Oilprice.com

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