The first monthly OPEC+ meeting to decide on the group’s production ended with an unexpected, in fact shocking two-month agreement:
- Saudi announced an unexpected and unilateral production cut of 1 mb/d in February and March,
- Russia and Kazakhstan will instead increase output modestly to meet seasonal needs while
- other producers will remain at their January levels.
Of the three, the Saudi decision to cut production by 1 million barrels came as a shock to the market, sending oil sharply higher.
What has behind it? As Goldman’s commodity strategist Damien Courvalin explains, despite this bullish supply agreement, Saudi’s decision “likely reflects signs of weakening demand as lockdowns return, with our updated 1Q21 balance actually weaker than previously.”
That said, Saudi’s action and the prospect for a tight market in 2Q21, as the rebound in demand stresses the ability to restart production, will likely support prices in coming weeks, leading Goldman to reiterate its bullish oil view. As a result, the bank continues to recommend a long Dec-21 Brent trade (currently trading at $52/bbl vs. its $65/bbl forecast) and expect sustained backwardation and lower implied volatility. Courvalin also notes that “fundamentals do matter, but we see the recent recovery in refining margins and product cracks as premature and the best way to express the expected weakness in near-term oil demand.”
Here are more details from the Goldman note:
The most significant decision was Saudi’s pre-emptive measure to reduce output in the face of renewed lockdowns with OPEC+ production now expected below our prior forecast by 1.45 mb/d in February and 1.85 mb/d in March. Saudi’s decision surprised as global demand beat expectations in December on shallower and shorter EU lockdowns and resilient jet demand. Further, by allowing Russia to increase production, Saudi undermined its efforts since April to have every producer implement similar cuts, with the Kingdom solely taking a fiscal hit. Finally, by lifting prices to their highest levels since last March, Saudis risk extending the ongoing recovery in shale production, as WTI spot prices now at $50/bbl can allow for higher activity and positive free cash flows (although such a response would likely take time to materialize with producers cautious of further OPEC surprises).
This, according to Courvalin, leaves a large expected slowdown in global oil demand as the most rational explanation for Saudi’s cut, likely signaled through its term contract to Asian consumers where infections are rising quickly (Korea, Japan, South-East Asia).
Meanwhile, Goldman’s high-frequency indicator of oil demand (or lack thereof) suggests that the return of more aggressive lockdowns is already weighing on demand, and the bank is reflecting these headwinds in its balance, taking down January and February oil demand to 92.5 mb/d from an upward revised December demand level of 93.5 mb/d.
Separately, and from a geopolitical perspective, the transition to a likely less supportive US administration may also have led Saudi to adopt a more supportive stance towards other Middle East producers, as illustrated in both today’s unilateral cut and restoration of ties with Qatar.
As a result of today’s announcement, Goldman’s updated Q1 2021 balance is weaker than previously although, with prospects for a tighter market in 2Q21 as the Saudi announcement hints. This new OPEC+ path and the bank’s demand downgrade lead the bank to forecast a 1Q21 0.25 mb/d surplus vs. a commensurate deficit previously (only half offset by a tighter December). Importantly, OPEC+ March production level will still be low just as global demand starts rebounding sharply driven by warmer weather and rising vaccinations. This points to the group potentially struggling to ramp-up output quickly enough, with estimates currently reflecting a 1.3 mb/d deficit in April-July despite OPEC+ increasing production by 4 mb/d, a historically tall order.
On net, Goldman believes today’s outcome will help support prices in the face of demand risks given Saudi’s commitment to balance the market, and the potential for Saudi to cut more – now that they have tipped their hand – than demand actually disappoints, risks of a tighter 2Q21 balance and a growing consensus bullish outlook for crude fundamentals later this year.
Finally, for those asking, Goldman’s own year-end Brent forecast of $65/bbl is well above market forwards and consensus expectations.
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Two New Cases of COVID-19 – Government of Nova Scotia
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- Two New Cases of COVID-19 Government of Nova Scotia
- Two new cases of COVID-19 reported Thursday in Nova Scotia CBC.ca
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- View Full coverage on Google News
Trudeau speaks to Pfizer CEO as delays to vaccine shipments get worse – CP24 Toronto's Breaking News
MIa Rabson, The Canadian Press
Published Thursday, January 21, 2021 4:39PM EST
Last Updated Thursday, January 21, 2021 8:00PM EST
OTTAWA – Prime Minister Justin Trudeau spoke to Pfizer CEO Albert Bourla by phone Thursday, the same day the company informed Canada delays to its shipments of COVID-19 vaccines are going to be even worse than previously thought.
Maj.-Gen. Dany Fortin, the military commander now overseeing the vaccine logistics for the Public Health Agency of Canada, said last week a factory expansion at Pfizer’s Belgium plant was going to slow production, cutting Canada’s deliveries over four weeks in half.
In exchange, Pfizer expects to be able to ship hundreds of millions more doses worldwide over the rest of 2021.
Tuesday, Fortin said Canada would receive 80 per cent of the previously expected doses this week, nothing at all next week, and about half the promised deliveries in the first two weeks of February.
Thursday, he said the doses delivered in the first week of February will only be 79,000, one one-fifth of what was once expected. Fortin doesn’t know yet what will come the week after, but overall, Canada’s doses over three weeks are going to be just one-third of what had been planned.
Trudeau has been under pressure to call Bourla, as the delayed doses force provinces to cancel vaccination appointments and reconsider timing for second doses.
Fortin said some provinces may be hit even harder than others because of limits on the way the Pfizer doses can be split up for shipping. The vaccine is delicate and must be kept ultra frozen until shortly before injecting it. The company packs and ships specialized coolers, with GPS thermal trackers, directly to provincial vaccine sites.
Ontario Premier Doug Ford said earlier this week he doesn’t blame the federal government for the dose delays but wanted Trudeau to do more to push back about it.
“If I was in (Trudeau’s) shoes … I’d be on that phone call every single day. I’d be up that guy’s yin-yang so far with a firecracker he wouldn’t know what hit him,” he said of Pfizer’s executives.
Trudeau informed Ford and other premiers of the call with Bourla during a regular teleconference to discuss the COVID-19 pandemic. Until Thursday, all calls between the federal cabinet and Pfizer had been handled by Procurement Minister Anita Anand.
Ford also spoke to Pfizer Canada CEO Cole Pinnow Wednesday.
Trudeau didn’t suggest the call with Bourla made any difference to the delays, and noted Canada is not the only country affected.
Europe, which on the weekend thought its delayed doses would only be for one week after European Commission President Ursula von der Leyen spoke to Bourla, now seems poised to be affected longer. Italy is so angry it is threatening to sue the U.S.-based drugmaker for the delays.
Mexico said this week it is only getting half its expected shipment this week and nothing at all for the next three weeks. Saudi Arabia and Bahrain also reported delays getting doses. Pfizer Canada spokeswoman Christina Antoniou said more countries were affected but wouldn’t say which ones.
Fortin said Pfizer has promised to deliver four million doses to Canada by the end of March and that is not going to change with the delay. With the current known delivery schedule, the company will have to ship more than 3.1 million doses over 7 1/2 weeks to meet that commitment.
Deliveries from Moderna, the other company that has a COVID-19 vaccine approved for use in Canada, are not affected. Canada has received about 176,000 doses from Moderna to date, with deliveries arriving every three weeks.
Moderna has promised two million doses by the end of March.
Both vaccines require first doses and then boosters several weeks later for full effectiveness. Together Pfizer and Moderna intend to ship 20 million doses to Canada in the spring, and 46 million between July and September. With no other vaccines approved, that means Canada will get enough doses to vaccinate the entire population with two doses by the end of September.
This report by The Canadian Press was first published Jan. 21, 2021.
Two COVID-19 cases reported Thursday – HalifaxToday.ca
Two new cases of COVID-19 are being reported today, Jan. 21. Nova Scotia has 22 active cases.
The two cases are in Northern Zone. The first case is related to travel outside of Atlantic Canada. The person is self-isolating, as required.
The other case is connected to École acadienne de Truro, a pre-primary to grade 12 school in Truro. Because the case came in after the cut-off for reporting, it will not appear on our data website and dashboard until tomorrow, Jan. 22.
The person was not in school today and is self-isolating. The school will close to allow for deep cleaning, testing and contact tracing, and is expected to reopen to students on Wednesday, Jan. 27. Students will learn from home during the closure and families of the school will receive an update on Tuesday, Jan. 26.
As with any positive case, public health will be in touch with any close contacts of this case and advise of next steps. Everyone who is a close contact will be notified, tested and asked to self-isolate for 14 days.
“Although our case numbers are low, we must not become complacent,” said Premier Stephen McNeil. “We know the virus wants to spread and we can prevent that from happening by following all of the public health protocols.”
Nova Scotia Health Authority’s labs completed 1,589 Nova Scotia tests on Jan. 20.
As of Jan. 20, 9,827 doses of COVID-19 vaccine have been administered. Of those, 2,696 Nova Scotians have received their second dose.
Since Oct. 1, Nova Scotia has completed 147,592 tests. There have been 477 positive COVID-19 cases and no deaths. No one is currently in hospital. Cases range in age from under 10 to over 70. Four hundred and fifty-five cases are now resolved. Cumulative cases may change as data is updated in Panorama.
“I’m encouraged to see that our case numbers have remained low over the past few weeks,” said Dr. Robert Strang, Nova Scotia’s chief medical officer of health. “We must remain vigilant and stay committed to following the public health measures.”
Post-secondary students returning to Nova Scotia from anywhere except Prince Edward Island or Newfoundland and Labrador are strongly encouraged to visit https://covid-self-assessment.novascotia.ca/ to book a COVID-19 test for day six, seven or eight of their 14-day self-isolation period. COVID-19 testing appointments can be booked up to three days in advance.
Visit https://covid-self-assessment.novascotia.ca/ to do a self-assessment if in the past 48 hours you have had or you are currently experiencing:
— fever (i.e. chills/sweats) or cough (new or worsening)
Two or more of the following symptoms (new or worsening):
— sore throat
— runny nose/nasal congestion
— shortness of breath/difficulty breathing
Call 811 if you cannot access the online self-assessment or wish to speak with a nurse about your symptoms.
When a new case of COVID-19 is confirmed, the person is directed to self-isolate at home, away from the public, for 14 days. Public health works to identify and test people who may have come in close contact with that person.
Anyone who has travelled from anywhere except Prince Edward Island or Newfoundland and Labrador must self-isolate for 14 days. As always, anyone who develops symptoms of acute respiratory illness should limit their contact with others until they feel better.
It remains important for Nova Scotians to strictly adhere to the public health order and directives – practise good hand washing and other hygiene steps, maintain a physical distance when and where required. Wearing a non-medical mask is mandatory in most indoor public places.
Nova Scotians can find accurate, up-to-date information, handwashing posters and fact sheets at https://novascotia.ca/coronavirus .
Businesses and other organizations can find information to help them safely reopen and operate at https://novascotia.ca/reopening-nova-scotia .
— additional information on COVID-19 case data, testing and vaccines is available on https://novascotia.ca/coronavirus/data/
— a state of emergency was declared under the Emergency Management Act on March 22, 2020 and extended to Jan. 24, 2021
— online booking for COVID-19 testing appointments is available at https://covid-self-assessment.novascotia.ca/
Government of Canada: https://canada.ca/coronavirus
Government of Canada information line 1-833-784-4397 (toll-free)
The Mental Health Provincial Crisis Line is available 24/7 to anyone experiencing a mental health or addictions crisis, or someone concerned about them, by calling 1-888-429-8167 (toll-free)
If you need help with a non-crisis mental health or addiction concern call Community Mental Health and Addictions at 1-855-922-1122 (toll-free) weekdays 8:30 a.m. to 4:30 p.m.
Kids Help Phone is available 24/7 by calling 1-800-668-6868 (toll-free)
For help or information about domestic violence 24/7, call 1-855-225-0220 (toll-free)
For more information about COVID-19 testing and online booking, visit https://novascotia.ca/coronavirus/symptoms-and-testing/
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