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Oil prices likely to continue to struggle in the fourth quarter as demand lags – CNBC

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Oil prices are expected to rise just slightly in the final quarter of the year, held back from further gains by a deep chill in global travel and a still healing economy.

Analysts forecast the prices of Brent and West Texas Intermediate should rise to the low to mid-$40s per barrel, but they also see risks tilted toward another drop in oil prices.

“If anything, they’re vulnerable to falling into the low $30s. The oil market is taking Covid the hardest of all of the asset classes out there,” said John Kilduff, partner with Again Capital. “Demand is just not coming back, especially for jet fuel.”

Oil prices have clawed back from a crushing decline earlier this year, as the global economy shut down. Oil futures prices were even temporarily negative, as the market reacted to huge oversupply and a big drop in global demand. WTI futures fell below $40 this week and settled at $38.71 Thursday, falling 3.9% amid worries about the coronavirus and reports of a rise in OPEC output.

“It looks really bleak right now. This was a bust for the ages,” said Kilduff. “The demand just isn’t picking up.”

Bank of America expects oil prices to remain range bound in the mid $40s to year end. “In terms of downside risks, a big second Covid-19 wave was always going to rank first, but a warm winter now ranks second given the persistent surplus in distillate fuels,” according to Francisco Blanch, managing director of commodities and derivatives at Bank of America Merrill Lynch Global Research.

Blanch expects little price movement even though he expects the oil market could move into a 4.9 million barrel a day deficit, due to OPEC cuts if demand does rise. “Yet diesel and jet fuel/kerosene make up by far the largest petroleum product group in the oil market,” notes Blanch. He said that means crude oil prices cannot gain real traction until distillate demand, including jet fuel, recovers to a more normal level.

The oil industry has been cutting back on production and spending on further development. Royal Dutch Shell, for instance, is looking to slash up to 40% of the cost of producing oil and gas in an effort to preserve cash so it can overhaul its operations and focus more on renewables and power, according to Reuters.

The industry is also debating how much of the Covid-related cutbacks could be permanent.

A recent report from BP supported a longer-term view that fossil fuel demand may have already hit its limit and may not be likely to fully recover from the impact of the virus. The Organization of Petroleum Exporting Countries (OPEC) recently cut back its near-term demand outlook, and now expects demand to average 90.2 million barrels a day in 2020, down 400,000 barrels a day from its last forecast and a decrease of 9.5 million barrels a day from a year ago.

“There are still these serious headwinds for oil in terms of the macro outlook,” said Helima Croft, managing director and head of global commodities strategy at RBC Capital Markets. “OPEC is very focused on compliance. It’s just a question to me of how much more can you get out of these producers in terms of compliance.” 

But news reports this week that OPEC output has risen slightly is raising a red flag. Libya production is now returning to the market, at a time when OPEC has committed to cutting back.

Croft said the agreement to cut back on production by OPEC and other producers, like Russia, will be reviewed again in December. The OPEC+ group is currently holding 7.7 million barrels off the market, but in December they are expected to return some oil to the market and hold back just 5.6 million barrels, she said.

“Looking at the concerns about a second [virus] wave, and I think about some of these OPEC issues, I think there are some downside risks,” said Croft. “I think the question is can OPEC be nimble in response to a changing outlook … It’s a difficult decision but they shouldn’t put 2 million barrels on the market.”

Citigroup analysts said OPEC members would be hurt by another dip into the $30s or even lower, and will be looking to defend the price above that level. The analysts said they expect OPEC+ to keep a floor under prices.

“Unless there’s a deep recession, we expect their mutual vulnerabilities will continue to provide the gel they need to largely keep their supply discipline intact,” said Citigroup strategists. “What’s more, the longer they wait, the more likely medium-term supply will flounder due to reduced capital spending.”

Blanch said OPEC will have to delay the return of more oil this year, unless demand picks up into the high 90 million barrels a day, not now expected by OPEC.

“If it’s a cold winter, maybe they get saved by the cold winter. If [virus] cases are not skyrocketing everywhere, they’re in better shape,” said Blanch. He noted one bright spot for the oil industry is that there has been no decline in petrochemical demand.

The U.S. industry has dramatically cut back production, from a high of 13.1 million barrels to 10.7 million a day earlier in mid-September. Demand for gasoline remains much weaker than normal at about 8.5 million barrels a day, down from 9.35 million barrels a year ago. U.S. drivers are an important factor in the global oil market, as U.S. gasoline sales normally account for about 10% of world oil demand.

“The economics are still not great for the U.S. but I think one of the big question marks is: ‘If the U.S. started to come back would the Russians just say we’re not going to do this anymore?’ Constrained output is helpful in keeping the Russians on board with OPEC+,” said Croft.

Blanch said another factor for oil prices is the Libyan oil is expected to come back on line. “If they’re back at full throttle, they’ll be back at one million barrels a day. That’s an extra million barrels they don’t need,” Blanch said.

That could also pressure OPEC+ when it looks to return oil to the market. “If demand doesn’t go into the high 90s [million barrels a day], OPEC is going to have some problems and they’ll have to extend the cuts,”  he said.

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WestJet to start refunding flights cancelled amid COVID-19 pandemic – Global News

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WestJet will be offering refunds to WestJet and Swoop passengers whose flights were cancelled as a result of the COVID-19 pandemic.

WestJet is the first Canadian airline to provide cash refunds for all flights. It had previously offered refunds for specific flights only, with future flight credit available for the majority of cancelled flights.

Read more:
WestJet offers refunds to passengers with cancelled European flights

In an emailed statement, the airline said starting Monday, Nov. 2, eligible passengers will be contacted “proactively,” a process that will start with those whose flights were cancelled by the airline at the start of the pandemic, starting with trips booked for March.

“The refund process is expected to take six to nine months to work through eligible requests,” WestJet said.

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The airline said it also expects an “administrative backlog” as the process gets underway, and asked customers to be patient, and wait to be contacted rather than contacting the airline themselves.

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Those looking for refunds for trips booked through WestJet Vacations are asked to continue following the process already in place.

Read more:
Airline passengers voice frustrations after WestJet cuts services, refunds with vouchers

“We are an airline that has built its reputation on putting people first,” WestJet president and CEO Ed Sims said in a news release.

“We have heard loud and clear from the travelling public that in this COVID-19 world, they are looking for reassurance on two fronts: the safest possible travel environment; and refunds.

“We have been delivering on a safe environment through our Safety Above All program since the onset of the pandemic and as of Monday, Nov. 2, we will proactively provide refunds to original form of payment to itineraries cancelled by WestJet and Swoop.”






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WestJet suspends most of its operations in Atlantic Canada amid the COVID-19 pandemic


WestJet suspends most of its operations in Atlantic Canada amid the COVID-19 pandemic

In a blog post on the WestJet website, Sims said the airline has been faced with a 95 per cent drop in demand, adding that for 72 days in a row, cancellations outnumbered bookings — a first in the company’s 25-year history.

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Now, bookings are once again higher than cancellations, WestJet said, but still not on par with what they were before the pandemic hit.

Read more:
Latest WestJet layoffs affect 3,333 employees as COVID-19 cripples airline industry

More than 140 of WestJet’s 181 planes are currently parked, Sims said, and more than 4,000 employees have been laid off.

The airline also suspended its service in Atlantic Canada earlier this month, citing the coronavirus pandemic as making the service “unviable.”

— With files from The Canadian Press

© 2020 Global News, a division of Corus Entertainment Inc.

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WestJet becomes first to offer direct refunds for travel cancelled because of coronavirus – CTV Toronto

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CALGARY —
WestJet says it will now offer refunds to passengers whose travel plans were cancelled because of COVID-19.

The Calgary-based airline announced Wednesday it was changing the method it would use to offer refunds for cancelled flights. It says it will now provide those affected with reimbursements directly to their original form of payment.

The company says the move is to reassure its customers in the post-COVID world.

“We have heard loud and clear from the travelling public that in this COVID world they are looking for reassurance on two fronts: the safest possible travel environment; and refunds,” said Ed Sims, president and CEO of WestJet, in a statement.

All customers who had flights cancelled by WestJet and Swoop as a result of the pandemic are eligible.

“Through the efforts of thousands of WestJetters, we are confident that we can now begin providing refunds proactively. We are the first national airline in Canada to do so.”

Starting Nov. 2, the company will be reaching out to affected guests but cautions there is a backlog, so it will take at least six to nine months for all the refunds to be processed.

FEDERAL WAGE SUBSIDY ‘A LIFELINE’

Sims said the company would likely be in a much different situation if it wasn’t for the support of all the levels of government. He said Ottawa’s Canadian Emergency Wage Subsidy (CEWS) made it possible for the company to weather the storm brought on by the pandemic.

The Canadian Transportation Agency and Transport Canada, he says, also realized early on that it would be “economically unviable” to provide immediate refunds.

“Airlines play a critical role in the travel and tourism food chain, bringing tens of millions of people to Canada each year; filling our hotels, restaurants, convention centres and tourist attractions. We reunite loved ones around the world. The greatest action the government could take as we begin to recover is to reassess the aviation infrastructure as a whole. While the industry, and Canadians, struggle to get back on their feet, WestJet have today taken a further step to accelerate our country’s economic recovery.”

Further information can be found on the airline’s website.

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Dollarama recalls bogus hand sanitizer – CBC.ca

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Dollarama Inc. is removing a counterfeit and recalled hand sanitizer from its shelves, which experts say should serve as a reminder of how important it is for retailers and consumers to do their due diligence when shopping.

“Since coronavirus started, it’s just been a huge Wild West of personal protective equipment (PPE),” said Yue Gao, a pharmacist and the quality assurance lead at Ontario-based PPE supplier MedyKits.

“Some people don’t realize that this is happening.”

Gao’s remarks Tuesday came after Health Canada revealed that it had uncovered a counterfeit Daily Shield hand sanitizer for sale at one of Dollarama’s Thunder Bay, Ont. with the same lot number as a legitimate Bio Life Sciences Corp. product.

Montreal-based Dollarama said the 250 mL product labelled NPN 80098979, Lot 6942 Expiry May 2023 was available in roughly half the chain’s stores and each location sold about 17 bottles, which were removed as soon as Health Canada began investigating.

Health Canada believes the fraudulent version of the product may not be effective at killing bacteria and viruses, and poses serious health risks because it contains methanol. The ingredient is not authorized for use in hand sanitizers and can cause severe adverse reactions or death when ingested.

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