Crude oil inventories in the United States shed 8 million barrels last week, the Energy Information Administration reported a day after the American Petroleum Institute estimated an 8-million-barrel draw that pushed oil prices higher.
At 484.4 million barrels, U.S. crude oil inventories remain above the five-year average for this time of the year when demand tends to be weaker. Yet the resurgence in coronavirus cases in the country will likely lead to a further weakening of oil demand, driving builds in inventories.
The EIA also reported a 1.5-million-barrel build in gasoline inventories for the week to October 30, compared with a decline of 900,000 barrels for the previous week.
Gasoline production averaged 9.1 million bpd last week, slightly down on the previous week.
In distillate fuels, the EIA reported an inventory decline of 1.6 million barrels for the week to October 30, which compared with a draw of 4.5 million barrels reported for the previous week. That was the second weekly draw in distillate fuel inventories, to the total tune of 8.3 million barrels.
Distillate fuel stocks have been a problem for U.S. refiners as well as refiners elsewhere, as the slump in air travels has left them will a lot of excessive inventories.
Distillate fuel production averaged 4.3 million bpd last week, slightly up on the week.
Refineries last week processed 13.6 million bpd of crude oil, operating at 75.3 percent of capacity. This compared with 13.4 million bpd a week earlier, operating at 74.6 percent of capacity.
Besides the brief respite oil prices got from the API report yesterday, the benchmarks have been on the decline again as new lockdowns in France, Germany, and the UK came into force while Covid-19 cases in the United States continued to rise at a fast pace, threatening to overwhelm some states’ healthcare systems.
Meanwhile, Tuesday’s election has had a mixed effect on oil prices so far as both a Biden and a Trump presidency have their pros and cons for the energy industry and the outlook for oil.
Crashes or corrections are normal occurrences in the stock market. After a rally, new drivers will cause turbulence and lead to a meltdown. The coronavirus outbreak is the latest event that hinders a bull run. However, the market still declines with or without a pandemic.
No one gets advance notice of the date, nature, and magnitude of the next dip. Income investors understand that a crash is inevitable. Panic is not their reaction, but it presents a challenge. You must pick a dividend stock that will endure or rule through a market crash. When a meltdown comes, your income stream will continue.
The TSX is back to pre-coronavirus levels
Investing in the stock market is like riding a roller coaster. Risks are unpleasant and ever-present. But historically, there are longer up moments than down periods. For instance, the S&P/TSX Composite Index has almost recovered entirely from its COVID low. Canada’s primary stock market is down by only 0.26% year to date.
The TSX sunk to a low of 11,228.50 on March 23, 2020. It breached the 17,000 level for the first time in nine months on November 20, 2020. The climb was steep, but it doesn’t mean the rally can sustain.
The clear and present danger
COVID-19 remains a clear and present danger. Due to its second wave, the country could return to lockdowns. Four provinces reported single-day highs last weekend. Prime Minister Justin Trudeau and public health officials urge Canadians to stay home to control the rise in cases.
Market volatility might heighten again in the last week of November, and the situation could deteriorate in December. If Canadians will not take greater care and follow health protocols, the new modelling of the federal government suggests there could be up to 20,000 daily cases next month.
Another crash could wipe out the gains of the TSX. Countries pin their hopes on a working COVID-19 vaccine. While there are two reported promising vaccines, returning to normalcy will not be instant.
Dividend king to own
A dividend king that stands out during a market crash is Enbridge(TSX:ENB)(NYSE:ENB). Investing in this energy stock is not 100% safe, although its regulated business can mitigate the risks and nip your worries in the bud.
Whether you’re chasing after dividend safety, a recurring income stream, or doubling your money in eight-and-a-half years, Enbridge is the dividend stock for you. The $77.58 billion energy infrastructure company pays a generous 8.46% dividend.
Enbridge generates revenues and derives 98% of its earnings from regulated businesses. Likewise, the majority of contracts with investment-grade customers are long term. The stock belongs to the highly volatile energy industry, but it transports, not produces, oil and distributes natural gas.
Prepare if you must
The next COVID-induced market crash could be worse than in March. Prepare if you must and initiate a position in Enbridge. Over the last 20 years, the total return is 728.38%. The company also raised dividends by 10% for three consecutive years. Take comfort in the low-risk business model. In a worst-case scenario, resiliency wins it for Enbridge investors.
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A Boeing 737 MAX jet, prepares to land at Boeing Field following a test flight Wednesday, Sept. 30, 2020, in Seattle. Families of Canadians killed in the Boeing 737 Max crash say the plane remains unsafe and should stay grounded, despite being cleared for takeoff by regulators in the United States. THE CANADIAN PRESS/AP, Elaine Thompson
Families of Canadians killed in the Boeing 737 Max crash say the plane remains unsafe and should stay grounded, despite being cleared for takeoff by regulators in the United States.
Paul Njoroge, whose wife, three children and died in the March 2019 crash of Ethiopian Airlines Flight 302, told the House of Commons transport committee Tuesday the aircraft is still “unstable.”
He and Chris Moore, whose daughter was among the 18 Canadian citizens who lost their lives, are calling for an independent inquiry into Transport Canada’s validation of Boeing’s best-selling airplane.
Moore says Canadians deserve to know why Transport Canada did not take action even after issuing a letter of concern before the crash about the Max plane’s anti-stall system, which safety regulators have said U.S. authorities failed to properly review.
Transport Canada said last week its recertification standards for the Max 8 diverge from those of U.S. regulators, including added procedures on the flight deck and differences in pilot training.
The Max planes have been grounded since March 2019 after the deadly crashes of a Lion Air flight near Jakarta in October 2018 and the Ethiopian Airlines flight less than five months later.
Canadians who lost loved ones in a deadly crash on a Boeing 737 Max plane in 2019 told MPs today that the aircraft should remain grounded in Canada, even though the U.S. has cleared it to fly again.
Family members of people killed in 737 Max crashes told the House of Commons’ transport committee this afternoon they want Canada to launch an independent inquiry into the crashes before clearing the planes for service.
“I believe the plane is still unsafe to fly,” said Paul Njoroge, who lost his entire family last year on Ethiopian Airlines Flight 302.
“I still have nightmares about how my wife must have felt helpless, seeing the fear in our children’s eyes, knowing they were about to die.
“We want Transport Canada to go back to the drawing board … I think that’s the only way Canadians can feel safe stepping onto a 737 Max.”
Canada’s 737 Max fleet has been grounded for 20 months in response to two deadly crashes. In March 2019, an Ethiopian Airlines flight plunged from the air southeast of the capital Addis Ababa minutes after takeoff, killing everyone onboard — including 18 Canadians and a family of permanent residents to Canada. Five months earlier, another 737 Max owned by Lion Air plunged into the Java Sea shortly after takeoff, killing all 189 passengers.
Ethiopia’s investigation report pointed the finger at Boeing, saying flaws in the aircraft’s design caused the crash. Inaccurate sensor readings activated the MCAS anti-stall system, which pointed the plane’s nose down as pilots struggled to right it, the report said.
Transport Canada has been working with the United States’ Federal Aviation Administration and received a directive listing changes to the aircraft. The department’s safety experts have been doing their own independent review of those proposed changes to determine if the 737 Max is safe to fly again.
Transport Minister Marc Garneau’s office said today the experts’ work is expected to conclude “very soon.”
‘Desolation and pain’
The families said today they want Transport Canada to explain why it approved the planes to fly in the first place, and why the fleet wasn’t grounded immediately after the crash in 2018.
Njoroge’s wife Carolyne Karanja, their three children (Ryan Njuguna, Kellie Pauls and Rubi Pauls) and mother-in-law Anne Karanja all died on board Ethiopian Airlines Flight 302. He reminded MPs the 737 Max they were on blasted a nine-meter-deep crater in the ground when it hit.
“The tragic death of my family left me in a chasm of solitude, desolation and pain,” he said. “I am here today because I believe that the crash that killed my family was preventable.”
Njoroge said aviation regulators around the country were not “diligent enough” when they decided to allow the 737 Max to fly.
“Certainly, Canada would not have lost its 18 citizens and an unknown number of Canadian permanent residents had Transport Canada made prudent decisions after the crash of Lion Air Flight 610,” he said.
Garneau has been criticized by victims’ families for not grounding Canada’s 737 Max fleet of 41 planes after the first crash, and for Canada being one of the last countries to do so after the second crash.
Families want to know what data Canada had after the first crash when it issued a directive to pilots to memorize a 5-step process to deal with a potential problem with the plane.
Garneau said in March 2019 it would have been “premature” to ground the fleet before investigators could pinpoint the cause of the second crash.
Garneau told the transport committee in March 2020 that Canada was “scrambling for information” and “had no clear picture of what happened” until data showed similarities to the Lion Air crash. Garneau said he notified the U.S. on March 13, 2019, and it followed suit two hours after Canada grounded the plane.
Too many unanswered questions, said Chris Moore
Chris Moore’s 24-year-old daughter Danielle died in the Ethiopian crash. He reminded the committee that Transport Canada had questions about the 737 Max as early as 2016 — but Canada didn’t get answers from Boeing and the U.S. Federal Aviation Administration before it approved the plane as safe to fly, according to government documents.
“Our government didn’t fully understand what they were validating,” said Moore. “Transport Canada was essentially rubber-stamping a doomed MAX plane. Eighteen Canadians perished and our government shrugged.”
David Turnbull, Transport Canada’s director of national aircraft certification, told the committee in March 2020 that the questions pilots asked about the aircraft’s anti-stall system form a regular part of the certification process. He insisted Canada would never allow the planes to fly if it was aware of any safety issues.
In a statement, Garneau’s office said today that Transport Canada wanted to know if a “stall warning system, versus a stall protection system” was being used that would have required that a “higher degree of design integrity be met.”
“In the end, Transport Canada was satisfied that the systems in question represent a stall identification system.”
Moore said today there are still too many unanswered questions.
“Did any engineer recommend grounding the plane?” he asked. “Did Canadian and American authorities feel superior in their knowledge and downplay the Lion Air crash because it occurred in a developing country? Would Canada have grounded the Max if the crash happened in Canada?”
The U.S. House Transportation Committee’s investigation released damning details about how Boeing “jeopardized the safety of the flying public” to keep up with production pressures, and cited a “culture of concealment” at Boeing that involved hiding flaws with the new MCAS system from 737 MAX pilots.
Garneau’s office said if Canada approves the aircraft to fly again, there will be conditions.
“These differences will include additional procedures on the flight deck and pre-flight, as well as differences in training,” said Garneau’s director of communications Amy Butcher in a statement to CBC News.
The office insisted Canada will not allow the plane to fly again until Transport Canada “is fully satisfied that all its safety concerns have been addressed, and that enhanced flight crew procedures and training are in place in Canada.”
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