Oil prices were trading down more than 1 percent on Monday after hitting their lowest since July, as Saudi Arabia made the deepest monthly price cuts for supply to Asia in five months and optimism about demand recovery cooled amid the pandemic.
Brent crude was at $42.11 a barrel, down 55 cents or 1.3 percent by 06:42 GMT, after earlier sliding to $41.51, the lowest since July 30.
US West Texas Intermediate crude skidded 64 cents, or 1.6 percent, to $39.13 a barrel after earlier dropping to $38.55, the lowest since July 10.
The world remains awash with crude and fuel despite supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, and government efforts to stimulate the global economy and oil demand. Refiners have reduced their fuel output as a result, causing oil producers such as Saudi Arabia to cut prices to offset the falling crude demand.
“Sentiment has turned sour and there might be some selling pressure ahead,” Howie Lee, an economist at Singapore’s OCBC bank said.
The Labor Day holiday on Monday marks the traditional end of the peak summer demand season in the US, and that renewed investors’ focus on the current lacklustre fuel demand in the world’s biggest oil user.
China, the world’s biggest oil importer which has been supporting prices with record purchases, slowed its intake in August and increased its products exports, according to customs data on Monday.
‘So many uncertainties’
“There are so many uncertainties with regard to the Chinese economy and their relationship with key industrialized countries, with the US and, these days, even Europe,” Keisuke Sadamori, director for energy markets and security at the International Energy Agency told the Reuters news agency.
“It’s not such an optimistic situation – that casts some shadow over the growth outlook.”
Saudi Arabia, the world’s top oil exporter, cut the October official selling price for Arab Light crude it sells to Asia by the most since May, indicating demand remains weak. Asia is Saudi Arabia’s largest market by region.
In August, the OPEC+ group eased production cuts to 7.7 million barrels per day after global oil prices improved from historic lows caused by the coronavirus pandemic cutting fuel demand.
Oil is also under pressure as US companies increased their drilling for new supply after the recent recovery in oil prices.
US energy firms last week added oil and natural gas rigs for the second time in the past three weeks, according to a weekly report by Baker Hughes Co on Friday.
Reuters news agency
Ford announces $1.8 billion investment to produce ‘fully battery electric vehicles’ in Canada – Electrek.co
Ford announced today that it is investing $1.8 billion CAD to produce “fully battery electric vehicles” in Canada.
The announcement is part of a deal between Ford and Unifor, an important general trade union in Canada, on a new national labour agreement.
The deal includes several new benefits for Ford employees in Canada:
- Competitive alternative work schedules to maximize production flexibility
- Enhanced temporary employee program
- 2.5% wage increase twice over the life of the agreement
- C$7,250 ratification bonus for full-time permanent employees and $500 for temporary employees
- Reduced grow-in period for new hires from 11 years to eight years
But they also negotiated a deal that should help bring some job security with a new deal to “transform Ford’s Oakville Assembly Complex from an internal combustion engine (ICE) site to also become a BEV manufacturing facility.”
They plan to invest $1.8 billion CAD ($1.35 billion USD) to start producing all-electric vehicles at the factory in Ontario, Canada:
“Based on the collective agreement ratified by employees today, Ford is committing to transform its Oakville Assembly Complex from an internal combustion engine (ICE) site to also become a BEV manufacturing facility, starting in 2024, as well as introducing a new engine program at its Windsor operations.”
Dean Stoneley, president and CEO of Ford of Canada, commented on the deal:
“Working collaboratively with Unifor, and as discussions continue with both the federal and provincial governments, this agreement is an important step toward building a stronger future for our employees, our customers and our communities. By introducing battery electric vehicle production at Oakville Assembly Complex, we are cementing our Canadian operations as a leader in advanced automotive manufacturing.”
The automaker didn’t confirm which electric vehicles it plans to produce in Canada.
Ford employs 3,600 people at the Oakville plant, where it produces the Ford Edge and Lincoln Nautilus.
Until recently, it was also producing the Ford Flex (2009–2019) and the Lincoln MKT (2010–2019).
In terms of electric vehicles, Ford produces the new Mustang Mach-E in Mexico and it plans to start production of the Ford F-150 Electric in Michigan in 2022.
Last month, Ford started construction on a new factory for its electric F-150 pickup truck at its current production site in Dearborn, Michigan.
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Amazon to hire 3,500 workers in B.C. and Ontario, expand office footprint – CBC.ca
Amazon.com Inc. will hire 3,500 Canadians to work in spaces it is opening and expanding in British Columbia and Ontario.
The e-commerce giant revealed Monday that 3,000 of the jobs will be in Vancouver, where it is growing its footprint, and another 500 will be in Toronto, home of a new Amazon workspace.
Jesse Dougherty, Amazon’s vice-president and Vancouver site lead, said the company wanted to offer the jobs in Canada because the country has an “enormous” amount of tech talent Amazon is eager to tap into and accommodate at home.
“I look at it through the lens of how can we grow so that people don’t have to leave Canada to learn and take on amazing global challenges that are of a scale that aren’t typically available here?” he said.
The new corporate and tech jobs will include software development engineers, user experience designers, speech scientists working to make Alexa smarter, cloud computing solutions architects, and sales and marketing executives.
The bulk of the jobs will be done out of the Post, a Vancouver building where Amazon will take over an extra 63,000 square metres of office space. By 2023 it will be operating across 18 floors it is leasing in the building’s north tower and 17 in its south tower.
Vancouver has long been seen as an attractive Canadian outpost for companies because of its proximity to the U.S. and major tech hubs including Silicon Valley and Amazon’s headquarters in Seattle.
The company will also welcome new workers in Toronto, where it will lease 12,000 square metres over five floors at an 18 York St. building that is not far from investors on Bay Street. It hopes workers will be in the building next summer.
Competition from Shopify
Amazon’s renewed interest in its corporate and tech workforce and footprint in the country comes after focusing the bulk of its efforts in the market on its network of 16 fulfilment centres — 13 already in operation and another three coming in the Ontario cities of Hamilton, Ajax and Ottawa.
Those centres have faced homegrown competition from Shopify Inc., an Ottawa-based e-commerce business that has shot up the Toronto Stock Exchange to hold the title of country’s most valuable company several times this year.
While it was long known for providing the back-end for companies to sell goods online, Shopify launched its own fulfilment network in 2019 and bulked up its presence in Vancouver with 1,000 hires and a new office earlier this year.
Dougherty doesn’t appear to be nervous about Shopify.
“Amazon works in lots and lots of different businesses and all of them are highly competitive and we welcome that because it inevitably creates better experiences,” he said.
“There are other benefits to having other tech companies raise the bar in markets we work in because it educates more talent, you can move around and it creates more economic activity.”
Amazon has invested more than $11 billion in Canada, including infrastructure and compensation, delivered $9 billion to the country’s economy and helped create at least 67,000 jobs, Dougherty said.
However, many have those jobs have been dogged with concerns.
The Warehouse Workers Centre, a Brampton, Ont.-based organization representing people in the warehouse and logistics sector, started a petition earlier this year that garnered hundreds of signatures claiming “Amazon is failing to protect our health.”
The petition alleged that Amazon, which employs tens of thousands of people in Canada and has fulfilment centres in Ontario, British Columbia, Alberta, Manitoba and Quebec, was refusing to give workers paid leave and not telling staff what their plans are if facilities are contaminated or suspected of being contaminated with COVID-19.
The petition claimed physical distancing at its facilities is “nearly impossible” and said some warehouse workers are now putting in 50 hours a week or more, which the petition called “unsustainable” and said needs to stop.
Amazon has spent more than $800 million on employee safety since the start of the year, Dougherty said.
The company has unveiled temperature checks, physical distancing measures and offered personal protective wear as part of that investment.
“The health of our employees is absolutely critical to us,” Doughtery said. “It is our top priority, so we are always paying attention to how those systems are working and ensuring they are the best they can be.”
Another Billion-Dollar Oil Merger Is On The Horizon – OilPrice.com
Devon Energy and WPX Energy are discussing a merger to weather the impact of the pandemic on the oil industry, unnamed sources in the know told the Wall Street Journal.
An agreement on a deal could be reached as early as today, with the value of the new entity at some $6 billion based on the two companies’ market caps. The merger will be an all-stock deal, the WSJ sources said.
Both companies have suffered hefty losses in their market valuation recently, with Devon’s share price shedding 64 percent over the past 12 months and WPX Energy losing 57 percent of its value.
The deal, if it goes through, could be a sign of further consolidation down the road. While big energy players are well placed to withstand any crisis even if they have to slash spending and cut jobs, mid-sized independents are much more vulnerable. This is especially true in the U.S. shale patch, where heavily indebted producers are dealing with the twin pressure of the demand-destructive pandemic and shareholders breathing down their necks for higher returns.
A wave of mergers and acquisitions is a hallmark of every downturn in the cyclical industries. This time, however, even this wave was uncertain as the pandemic made potential buyers reluctant to risk their money on even otherwise lucrative assets. If oil demand was not coming back to pre-crisis levels, there was no point to build an oil asset portfolio. Yet the news about Devon and WPX suggests there may still be hope for deals in the oil and gas space.
For many companies in the sector, a merger could be the only way to survive as oil prices appear to be stuck at $40 a barrel: lower than the majority of U.S. shale drillers need to break even, let alone turn in a profit.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.
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