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Oil And Gas Prices Fall As OPEC Fails To Act – OilPrice.com

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Oil And Gas Prices Fall As OPEC Fails To Act | OilPrice.com

Nick Cunningham

Nick Cunningham is an independent journalist, covering oil and gas, energy and environmental policy, and international politics. He is based in Portland, Oregon. 

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Oil sank again as OPEC+ backed away from an emergency meeting.

OPEC’s Joint Technical Committee (JTC) recommended extending the current production cuts through the end of the year while adding an additional 600,000 bpd in reductions. 

Russia hesitated last week, before signaling some support for additional cuts. Still, nothing has yet been confirmed or approved. OPEC+ had raised expectations of an emergency meeting, rumored to take place as soon as this week, but now it looks like nothing will occur before the previously scheduled meeting in March.

Nevertheless, the odds of deeper cuts materializing remain relatively high. But oil traders do not seem to care. The announced decision by OPEC’s JTC to recommend further action has done nothing for oil prices. WTI dipped below $50 per barrel on Monday.

Meanwhile, warring factions in Libya have resumed negotiations in Geneva, which could lead to a restart of oil flows. “Over 1 million barrels of additional oil per day from Libya could possibly push the Brent price towards the $50 per barrel mark in the short term,” Commerzbank wrote in a note on Monday. “That said, we expect the oil price to stabilise in the medium term if OPEC+ agrees on the additional production cuts.”

Others were more bullish. JBC Energy noted that Chinese oil demand has “collapsed,” but that the effect could be temporary. Because of that, additional cuts from OPEC+, and the extension of the agreement through the end of 2020, could over-tighten the market. “Although this can still change if there are signs that attempts to curb the spread of the disease are failing, and potentially further largescale quarantines are implemented, if the recommendations of the JTC are adopted and carried through, we risk a return to the extremely tight physical crude picture we have only recently left behind,” JBC Energy wrote in a report. Related: Are Oil Markets Overreacting To The Coronavirus?

Moreover, any cuts taken in March will take several weeks before they materialize in the market, which, again, could occur after the worst of the coronavirus has already passed.

Meanwhile, it isn’t just oil dragged down into a bear market. The crisis for gas is arguably worse.

On Monday, Nymex prices for March delivery fell below $1.80/MMBtu, a price that is ravaging the U.S. shale gas industry. But the gas glut is not just isolated to the U.S. – it is now a global phenomenon. LNG prices have fallen below $3/MMBtu in Asia. In Europe, gas inventories are extraordinarily high for the time of year.

China’s Cnooc is trying to wriggle out of LNG purchasing agreements, declaring force majeure on several LNG cargoes late last week. LNG suppliers, including Shell and Total SA, rejected the declaration.

“With demand plunging, our tanks are topping. And workers are getting exhausted waiting for colleagues to return from holiday to relieve them,” an executive at an LNG terminal in northern China told Reuters.

The market for LNG was “already weak,” according to Ira Joseph, global head of power and gas analytics at S&P Global Platts. The coronavirus could keep JKM prices (spot LNG in Asia) at $3/MMBtu for longer.

“Honestly speaking, if I have one wish for free, please send me an ice blizzard for the gas prices,” Rainer Seele, CEO of Austrian energy company OMV, said on CNBC last week.

Related: Oil Demand Under Siege As Airlines Cancel Over 50,000 Flights

The hit to the global economy from the outbreak will exceed that of SARS in 2003, according to IHS Markit. China was a much smaller economy at the start of the century. Now China is the world’s second-largest economy and its largest source of growth – China accounted for nearly 40 percent of global growth last year. 

“The concern remains that the wider markets have yet to reflect the full impact of the disruption,” said Saxo Bank commodity strategist Ole Hansen, according to Reuters.

“With China being the world’s most dominant consumer of raw materials, the impact continues to be felt strongly across key commodities and the world is facing the biggest demand shock since the 2009 global financial crisis.”

By Nick Cunningham of Oilprice.com

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This Week's Top Story: Canada's Real Estate Bubble Eliminated By Data Revision & More Experts See Lower Prices – Better Dwelling – Better Dwelling

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  1. This Week’s Top Story: Canada’s Real Estate Bubble Eliminated By Data Revision & More Experts See Lower Prices – Better Dwelling  Better Dwelling
  2. The Latest in Mortgage News: BoC’s Affordability Index reaches worst level since 1991 – Mortgage Rates & Mortgage Broker News in Canada  Canadian Mortgage Trends
  3. Housing Market Crash: How to Make a Profit  The Motley Fool Canada
  4. House Prices In Canada Are Set To Drop In 2023 & Here’s How It Will Compare To Pre-COVID Times  Narcity Canada
  5. Canadians are being crushed by the housing market. B.C.’s wannabe premier might be able to help  Canada’s National Observer
  6. View Full coverage on Google News



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China's consumer and factory data miss expectations in July – CNBC

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Employees working on an air-conditioner production line at a Midea factory in Guangzhou, China.
Jade Gao | AFP | Getty Images

BEIJING — China reported data for July that came in well below expectations as the real estate slump and Covid controls dragged down growth.

Retail sales grew by 2.7% in July from a year ago, the National Bureau of Statistics said Monday. That’s well below the 5% growth forecast by a Reuters poll, and down from growth of 3.1% in  June. Within retail sales, catering, furniture and construction-related categories saw declines.

Sales of autos, one of the largest categories by value, rose by 9.7%. The gold, silver and jewelry category saw sales rise the most, up by 22.1%. Online sales of physical goods rose by 10% year-on-year, faster than in June, according to CNBC calculations of official data.

Industrial production rose by 3.8%, also missing expectations for 4.6% growth and a drop from the prior month’s 3.9% increase.

Fixed asset investment for the first seven months of the year rose by 5.7% from a year ago, missing expectations for 6.2% growth.

Investment into real estate fell at a faster pace in July than June, while investment into manufacturing slowed its pace of growth. Investment into infrastructure rose at a slightly faster pace in July than in June. Fixed asset investment data is only released on a year-to-date basis.

“This year, the property market overall has shown a downward trend,” Fu Linghui, spokesperson of the National Bureau of Statistics, told reporters in Mandarin, according to a CNBC translation.

“Real estate investment has declined, and may have had some impact on related consumption,” he said.

Young people’s unemployment climbs

While the overall unemployment rate in cities ticked lower to 5.4% in July, that of young people remained persistently high.

The unemployment rate among China’s youth, ages 16 to 24, was 19.9%. That’s the highest on record, according to Wind data going back to 2018.

Fu attributed the high level of youth unemployment to Covid’s impact on businesses’ operations and their ability to hire.

In particular, he noted how the services sector, where young people typically account for a greater number of jobs, has recovered rather slowly. Fu also pointed to was young people’s current preference for jobs with more stability.

Stable jobs in China typically include those at state-owned enterprises rather than positions at start-ups or smaller companies.

“The national economy maintained the momentum of recovery,” the statistics bureau said in a statement. But it warned of rising “stagflation risks” globally and said “the foundation for the recovery of the domestic economy is yet to be consolidated.”

Analyst forecasts for July were projected to show a pickup in economic activity from June, as China put the worst of this year’s Covid-related lockdowns behind it, especially in the metropolis of Shanghai.

Exports remained robust last month, surging by 18% year-on-year in U.S. dollar terms despite growing concerns of falling global demand. Imports lagged, climbing by just 2.3% in July from a year earlier.

However, China’s massive real estate sector has come under renewed pressure this summer. Many homebuyers halted their mortgage payments to protest developer delays in constructing homes, which are typically sold ahead of completion in China.

The deterioration in confidence puts developers’ future sales — and an important source of cash flow — at risk.

Statistics spokesperson Fu described the construction delays as specific to some regions.

He said the real estate market is “in a stage of building a bottom” and its impact on the economy will “gradually improve.”

Fu said in response to a separate question that once Covid is under control, consumers’ pent up demand will be released.

The potential for a Covid outbreak has remained another drag on sentiment. A surge of infections in tourist destinations, especially the island province of Hainan, stranded tens of thousands of tourists this month.

The local situation reflects the large gap between goals set at the beginning of the year and the ensuing reality. Hainan had set a GDP target of 9%, but was only able to grow by 1.6% in the first six months.

Similarly, at a national level, China’s GDP grew by just 2.5% in the first half of the year, running well below the full-year target of around 5.5% set in March.

When asked about the target Monday, Fu did not discuss it specifically. But he pointed to a host of challenges for growth at home and abroad, including growing uncertainties overseas.

Looking ahead, Fu said China’s economy “still faces many risks and challenges” in sustaining its recovery and maintaining operations in a “reasonable range.”

China’s top leaders indicated at a meeting in late July the country might miss its GDP goal for the year. The meeting did not signal any forthcoming large-scale stimulus, while noting the importance of stabilizing prices.

The country’s consumer price index hit a two-year high in July as pork prices rebounded.

Ahead of Monday morning’s data release, the People’s Bank of China unexpectedly cut rates on two of its lending rates — both for the first time since January, according to Citi.

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Why the CRA might owe you money; Airlines continue to deny compensation claims: CBC's Marketplace cheat sheet – CBC News

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Miss something this week? Don’t panic. CBC’s Marketplace has rounded up the consumer and health news you need.

Want this in your inbox? Get the Marketplace newsletter every Friday.

Nearly 9 million Canadians have $1.4B in uncashed CRA cheques — could you be one of them?

Good news from the Canada Revenue Agency for a change? Now that’s a treat. 

Over the next month, the CRA, Canada’s tax agency, says it will begin sending out reminders to tens of thousands of Canadians to let them know they’ve got money owed to them they haven’t yet claimed.

On Monday, the CRA said it has roughly $1.4 billion worth of uncashed cheques on its books, some of which has been owed as far back as 1998. As of May, 8.9 million Canadians had some sort of uncashed cheque attached to their name. The average amount owed is $158, the tax agency said.

While the CRA handles billions of dollars in taxes and rebates every year, not all of it makes it into the hands of Canadians who are entitled to it, mostly due to people either losing the cheques, or changing addresses, meaning they never received it in the first place.

“We want to make sure this money ends up where it belongs. In taxpayers’ pockets!” the tax agency said.

The CRA said it will soon notify roughly 25,000 recipients of the Canada child benefit and related provincial/territorial programs, GST/HST credit and Alberta Energy Tax Refund if they are owed money, and that another two groups of 25,000 will be notified this November and in May of 2023.

But if you think you may be one of those lucky Canadians, you might want to be a little bit more proactive. Read more

You can check if you have uncashed payments from the Canadian Revenue Agency by logging in to or signing up for an online CRA account. (Graham Hughes/The Canadian Press)

Customers cry foul as Air Canada, WestJet continue to deny certain compensation claims despite new directive

Judging from plenty of anecdotal evidence, flying has been a bit of a headache lately.

Long flight delays and crew shortages have led to mayhem at many Canadian airports. 

But a recent Canadian Transportation Agency (CTA) decision was supposed to help clear the air on at least once source of frustration: the rules around flight compensation. 

When issuing a decision in a WestJet case on July 8, the transport regulator clarified that, in general, airlines can’t deny passengers compensation for flight disruptions caused by crew shortages. 

However, the clarification has only ignited fury for some passengers, including Frank Michel, who was denied compensation by Air Canada, and Jennifer Peach, denied by WestJet, due to crew shortages and constraints and safety concerns. 

“It’s insulting,” said Michel of Marquis, Sask.

Under federal rules, airlines only have to pay compensation — up to $1,000 per passenger — if the flight disruption is within the airline’s control and not safety-related. 

WestJet and Air Canada each declined to comment on individual cases, but both said they abide by federal air passenger regulations. WestJet said that safety is its top priority. Air Canada said airlines shouldn’t be penalized for cancelling flights for safety reasons. 

But Michel says the company isn’t playing by the rules.

“CTA has already made it clear that crew constraints is not an acceptable excuse,” he said. “It’s not a safety issue. It’s a management issue. You have to manage your resources.” Read more

Leigh and Frank Michel of Marquis, Sask., were denied compensation by Air Canada after flight disruptions in June left them sleeping on an airport floor. (Frank Michel)

You tip your hairdresser, but what about your mechanic? It might only be a matter of time

You probably tip the person who cuts your hair. Should you do the same for the person fixing your car? 

Customers are increasingly seeing a gratuity option on card payment machines in industries where tipping was never previously part of the cost, from auto shops to fast food giants. 

The phenomenon, dubbed “tip creep,” is leaving a bad taste for some consumers, who have vented online about being asked if they want to pay an extra 15 per cent or more on top of the price of a takeout pizza, oil change or propane tank refill. 

“Tipping is spreading to a lot more places right now, so where we wouldn’t have previously been prompted to tip, now it seems to be a lot more common,” says Simon Pek, an associate professor at the University of Victoria’s Gustavson School of Business who researches tipping practices.

As customers shift away from carrying cash, it’s easier than ever for any business to ask for a little bit of extra money by adding the automatic prompt — what psychologists call a “tip nudge” — to their card payment machine.

Inflation may play a factor, too. Business owners, for example, may see adding a tip button as a way to give in to workers’ demands for higher pay without necessarily affecting their bottom line. 

“We’ll still see a lower sticker price, we’ll still buy the product, and then adding 10 to 20 per cent after — it might be frustrating, but people still end up doing it, and that’s often cheaper for a company than having to pay those wages,” said Pek. Read more

Do you have an inflation story to share? Email us at marketplace@cbc.ca

With fewer customers carrying cash, companies are shifting away from the traditional tip jar on the counter to add a gratuity option on their card payment machines. Here, a tip jar is pictured at a Vancouver cafe on April 30, 2019. (Jan Zeschky/CBC)

What else is going on?

Cineplex ekes out $1.3M quarterly profit — its first since pandemic began
11 million people saw a movie at a Cineplex location during the quarter, up from 1 million last year.

Polio largely vanished thanks to vaccines. So why is it now back in more countries?
Infections, wastewater samples in U.K., U.S., Israel point to challenges in wiping out virus globally.

Climate change is hurting our mental health. These researchers want to help
Scientists across Canada are trying to learn enough about climate anxiety to prevent and treat it.

Marketplace needs your help

Marketplace is marking its 50th season and you’re invited to celebrate with us! Join us for a live taping in Toronto where you’ll get a sneak peek of our launch episode this fall.There will be prizes and light refreshments available, but tickets are limited. Sign up here

Have you been travelling recently and noticed that your hotel is no longer providing services they used to, like breakfast or daily housekeeping? We’d like to hear about products and services where you think companies are “skimping out.” Email us at marketplace@cbc.ca

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