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Incoming 50 Million Barrel 'Saudi Oil Bomb' Could Send Prices Even Lower – OilPrice.com

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Incoming 50 Million Barrel ‘Saudi Oil Bomb’ Could Send Prices Even Lower | OilPrice.com

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    By now even the 165,727 “professional investors” who are long the USO ETF on the free, glitch-prone platform Robin Hood, are aware that the problem facing global oil production is that there is simply no storage where to put all the physical oil (as we warned in late March).

    And if even the army of Robinhood-ers now know how impossible it is to find space for physical oil on the continental US, then Saudi Arabia – which sparked the current crude crisis and which will not stop until shale is completely crushed – is certainly aware.

    Which is why with the US unable to store its own output, some 50 million barrels of Saudi oil are on their way to the United States and due to arrive in the coming weeks, piling even more pressure on markets already struggling to absorb a glut of stocks, Reuters and MarineTraffic reported.

    Source: MarineTraffic

    Shipping data showed the more than 20 supertankers – each capable of carrying 2 million barrels of oil – were sailing to key U.S. terminals, especially in the U.S. Gulf. Three separate tankers, also chartered by Saudi Arabia, were currently anchored outside U.S. Gulf ports.

    According to Reuters sources, the kingdom had tried to seek storage options for the cargoes from tanker owners when the ships were chartered last month, but many pushed back given booming rates and not wanting tied up vessels.

    The result was an outpouring of anger from the increasingly political hedge fund manager, Kyle Bass, who tweeted earlier that “the Saudis and Russians have declared war against US shale energy companies. It seems they weren’t happy with American energy independence. Storage full..largest glut in history.. Saudis are sending us a 50 million barrel oil bomb. How negative will June crude go?”

    Premium: The Oil Sector That Will Suffer The Most

    The anger at the incoming Saudi “bomb” has spread all the way to Washington, and U.S. officials said in recent days that Washington is considering blocking Saudi shipments of crude oil, or putting tariffs on those shipments, adding to difficulties for the cargoes now on the water.

    U.S. senator Ted Cruz said on Twitter on Tuesday: “My message to the Saudis: TURN THE TANKERS THE HELL AROUND.”

    In response, two sources said Saudi Arabia was looking into whether it could re-route the cargoes elsewhere if the United States halted imports.

    Oil traders active in European and Asian markets said there was expectation that the Saudis would look to divert the cargoes to other markets if a ban was imposed… which in turn would put huge pressure on storage tanks in those two regions, and depress local oil benchmarks.

    “Europe looks full, but surely if the Saudis offer it at really cheap levels, buyers would take it,” a source with an international trading firm told Reuters. “Some still have storage spaces or may agree to float it for some time.” A source at a separate oil trading firm active in Asia said they expected many of the barrels that were bound for the United States to flow to the region if exports were blocked.

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    “This could prove to be a very expensive exercise for Saudi Arabia as whatever happens with the cargoes and the tanker owners will need to be paid demurrage (for the ships) and those costs would have been locked in when the market was higher to secure the charters,” a shipping source said. “While this is an expensive gamble for the Saudis, shutting off production would have been proved even more costly.”

    Additional costs – or demurrage – were estimated at $250,000 a day based on rates last month when a lot of vessels were booked. Daily tanker rates soared to nearly $300,000 in the past month and though they have retreated to $150,000 a day this week, they are still significant and would be in addition to other costs including insurance if the ships are held up.

    Even if the Saudi tankers make it to the US, it is not clear who would want their cargo. With the economy shut down, driving virtually non-existent and gasoline demand falling off a cliff, refiners have been absent from oil markets in the United States in recent days as they slash processing rates and as demand dries up, physical oil market sources said. “There is more reluctance now with fresh shipments as refiners in the U.S. have no homes for the oil,” another shipping source said.

    Marathon Petroleum, Exxon Mobil, Chevron and Phillips 66, which traditionally among the biggest U.S. buyers of Saudi crude, have gone radiosilent.

    As Reuters adds, most of the large buyers of Saudi oil are along the West Coast. The region accounts for about half of all Saudi crude imports to the United States, according to the EIA. Storage there was already 65% full as of April 10; two weeks later and that number is approaching 100%. The Gulf Coast – which is the second biggest US destination for Saudi oil – was about 55% full.

    The imminent arrival of the Saudi tankers comes at a time when the main U.S. storage hub in Cushing, OK, is expected to be full within weeks.

    The question reached the very top on Monday, when President Trump said he would “look at” possibly stopping Saudi shipments to the United States. While it wasn’t clear what Trump had in mind, last week, Frank Fannon, the U.S. assistant secretary of state for energy resources, said tariffs were a possibility.

    By Zerohedge.com

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      Bell inks 5G equipment deal with Ericsson; leaves door open to Huawei – BNNBloomberg.ca

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      MONTREAL – Huawei Technologies Inc.’s ambitions to be a player in Canada’s 5G network took a major hit Tuesday as two of the country’s three largest telecom companies announced partnerships with the Chinese tech giant’s European rivals.

      Bell Canada announced Tuesday morning that Sweden-based Ericsson will be its second supplier of the radio access network equipment that has been Huawei’s main product line in Canada since entering the market in 2008. Earlier this year, Bell signed its first 5G wireless network supplier agreement with Nokia, a rival of Ericsson and China’s Huawei.

      Later Tuesday, Telus Corp. announced that it had also selected Ericsson, as well of Nokia of Finland, as suppliers for its 5G networks.

      Neither Bell nor Telus provided details on how much their contracts with Ericsson and Nokia were worth.

      Huawei’s participation in the construction of Canada’s 5G network has become a major sticking point between Ottawa and Washington. The U.S. has warned Canada, the United Kingdom and other allies that it will limit intelligence sharing with countries that have Huawei equipment in their 5G networks – citing the potential for spying by China, an allegation Huawei denies.

      “Huawei has worked closely with Bell in Canada for many years, helping them build one of the world’s leading 4G LTE networks,” Huawei Canada spokesman Alykhan Velshi said in a statement.

      He added that Huawei’s remains committed to Canada and looks forward to the federal government completing its 5G review and its decision about Huawei’s role in Canada.

      “We continue investing more than a quarter of a billion dollars a year in R&D in Canada. We continue building new research partnerships with Canada’s world-class universities. As we have for more than a decade, we continue to work with our Canadian telecom partners to help them build and support state-of-the-art networks that connect Canadians,” Velshi said.

      Ericsson, already a supplier of 4G LTE wireless and other technology to Bell and the main supplier for its rival Rogers Communications, also has a major research and development presence in Montreal.

      Bell said Ericsson will also support its rollout of 5G-enhanced fixed wireless home internet service to rural areas, which generally have less access to land-based fibre optics networks.

      On Tuesday, Bell indicated the door remains open to partnering with Huawei, depending on the outcome of the federal government’s review.

      “We’re working with multiple vendors to build our 5G network – as we did with our successful buildout of 4G LTE, which included Cisco, Ericsson, Huawei, Nokia and others,” said Bell spokesperson Marc Choma in an email to BNN Bloomberg. “Huawei has been a reliable and innovative partner in the past and we would consider working with them in 5G if the federal government allows their participation.”

      A spokesperson for Telus did not respond to BNN Bloomberg’s question about whether it is also open to partnering with Huawei on its 5G network if permitted by the government.

      Prior to the arrest of Huawei Technologies chief financial officer Meng Wanzhou in Vancouver in December 2018, the Chinese company wasn’t a household name in Canada.

      Since Meng’s arrest, which has sparked a major rift between China and Canada and focused worldwide attention on Huawei, the federal government has been undecided about whether the Chinese company will be allowed in Canada’s 5G networks – which are currently being assembled.

      Analysts have said Bell and Telus use Huawei extensively in their fourth-generation networks and would be more affected by a Huawei ban than their rival Rogers Communications, which has predominantly used Ericsson network gear.

      Besides Huawei, Ericsson and Nokia, there are other companies that want a piece of the 5G network upgrades.

      Samsung Electronics has announced a deal to supply equipment for Videotron’s wireless network in the province of Quebec and the Ottawa region of Ontario.

      With files from BNN Bloomberg

      BNN Bloomberg is a division of Bell Media, which is owned by BCE.

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      Telus selects Nokia, Ericsson as 5G suppliers – Yahoo Canada Finance

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      Toronto, Canada - June 16, 2019: TELUS Scarborough office building in Toronto, canada. Telus is a Canadian telecommunications company that provides telecommunications products and services.

      Vancouver-based national carrier Telus has selected Nokia and Ericsson as its 5G vendors, a press release from the company said. 

      The news comes the same day that Bell announced it too would use Ericsson to provide radio access network (RAN) equipment. 

      “Our team is committed to rolling out superior network technology from urban to rural communities, fueling our economy and driving innovation as we power Canadians into the 5G era through an unparalleled network experience,” Telus’ CEO Darren Entwistle said in the release. 

      “Our 5G deployment will support economic growth and diversity that will be essential for the virtualization of health, education, teleworking, and stimulating the economic growth and recovery given the impact of COVID-19.”

      During its Q1 2020 earnings, CFO Doug French said its focus right now is to help its customers during the COVID-19 crisis.

      In its Q4 2019 earnings, the carrier said it was not going to pre-announce its 5G launch plans but that its initial module, or the first phase of the 5G rollout, would be with Huawei until the government approves its RFP.

      Bell and Telus use Huawei’s network equipment in some areas. The federal government is still reviewing whether or not it intends to ban the Chinese telecommunications manufacturer from participating in Canada’s 5G rollout.

      Rogers also uses Ericsson as a 5G vendor.

      <p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Download the Yahoo Finance app, available for&nbsp;Apple&nbsp;and&nbsp;Android&nbsp;and sign up for the&nbsp;Yahoo Finance Canada Weekly Brief.&nbsp;” data-reactid=”31″>Download the Yahoo Finance app, available for Apple and Android and sign up for the Yahoo Finance Canada Weekly Brief. 

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      North American equity markets rally in spite of widespread unrest – BNNBloomberg.ca

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      1:15 p.m. ET: North American equity markets extend gains into midday, oil rallies

      North American equity markets were solidly in positive territory through the midday trade, with the S&P/TSX Composite Index up 0.9 per cent, the Dow Jones Industrial Average gaining 0.8 per cent, the S&P 500 rising 0.4 per cent and the Nasdaq Composite modestly higher, up 0.1 per cent.

      U.S. benchmark oil West Texas Intermediate accelerated higher into the afternoon, rising more than three per cent to US$36.55 per barrel to trade at session highs.

      That helped lift the TSX energy sector, which led the way on the composite with a 3.4-per-cent gain on the session.

      The Canadian dollar continued to move higher against its U.S. counterpart, gaining a third of a cent to trade at 74.04 cents U.S., though the greenback has been broadly weaker against almost all of its major-market peers.

      9:35 a.m. ET: North American equity markets rally in spite of widespread unrest

      North American markets notched gains into the early trading day Tuesday, with the S&P/TSX Composite Index and Dow Jones Industrial Average both up half a per cent, the S&P 500 gaining a third of a per cent and the Nasdaq Composite Index up a more modest 0.1 per cent. The gains came in spite of widespread civil unrest in the United States, as some police responded with force to demonstrators protesting against systemic racial inequities.

      In Toronto, shares of BlackBerry Ltd. rose about seven per cent to extend Monday’s gains after an unconfirmed report from StreetInsider said the company has held talks with Fairfax Financial over a deal for Fairfax to acquire the remainder of BlackBerry’s shares. In an email to BNN Bloomberg, BlackBerry declined to comment on rumours or speculation.

      BlackBerry shares rise on takeover report

      BlackBerry is a stock to watch after a report Monday suggesting Fairfax Financial was considering a takeover of BlackBerry sent the shares higher. BNN Bloomberg’s Paul Bagnell has more.

      Crude oil prices were higher, with U.S. benchmark West Texas Intermediate up half a per cent to US$35.0 per barrel, though it had briefly breached the US$36 level earlier in the day. Crude has gotten a boost from the OPEC+ group’s production curtailments, and there are reports the group may extend those cuts for another month to support prices.

      Alberta’s Western Canadian Select also gained, rising 1.55 per cent to US$29.51 per barrel.

      The Canadian dollar extended Monday’s surge against its U.S. counterpart, gaining another two-tenths of a cent to 73.90 cents U.S.

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