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Oil surges on Middle East tensions, output cuts – Yahoo Finance

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Oil prices surged for a second day Thursday as the market digests a flareup of tensions in the Middle East and looks ahead to production cuts from the world’s largest producers.

West Texas Intermediate crude oil, the U.S. benchmark, surged 17 percent to $16.18 barrel while Brent crude, the international benchmark, was higher by 7.61 percent at $21.92.

“The rally in oil prices is mostly a function of the rollover of the contract as we are uncertain what will happen when the next contract matures regarding storage and possible credit issues,” Sebastien Galy, a Luxembourg-based senior macro strategist at Nordea Asset Management, told FOX Business.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="CME GROUP PREPARING FOR POSSIBILITY NEGATIVE OIL PRICES PERSIST” data-reactid=”15″>CME GROUP PREPARING FOR POSSIBILITY NEGATIVE OIL PRICES PERSIST

Thursday’s advance is a continuation of the gains seen Wednesday after President Trump heightened tensions in the Middle East by ordering the Navy to destroy Iranian gunboats that harass U.S. ships. The Pentagon later tamped down his comments, suggesting ships have the right to self-defense.

The oil market has come under siege this year as ballooning supplies exacerbated by the price war between Russia and Saudi Arabia hit the market at the same time that government responses to COVID-19 destroyed demand.

On Wednesday, the U.S. Energy Information Administration said crude oil stockpiles rose by 15 million barrels in the week ended April 17. At 518.6 million barrels, U.S. inventories are 9 percent higher than their average for this time of year.

The inventory build has no end in sight and producers are running out of storage. The huge runup in supply has been the catalyst in oil falling 81 percent this year through Tuesday. Earlier this week, prices plunged into negative territory for the first time.

The wild swings come as the besieged market looks ahead to May 1, when the production cuts agreed to by the world’s largest oil producers takes hold. The agreement will see OPEC and its allies reduce output by 9.7 million barrels per day and other large producers such as the U.S. and Canada deliver cuts mostly as a result of lower prices. In total, the deal will remove 20 million barrels a day.

With demand down about 30 million barrels a day globally, however, there are concerns the agreement doesn’t go far enough. OPEC is reportedly considering another meeting in May to address those issues.

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“In the short-term, the market will be focused on any sign that Saudi Arabia and Russia are moving towards another agreement as President Trump had clearly pointed out that the last agreement was insufficient,” Galy said. “Oil prices as defined by the WTI are likely therefore to converge towards $20, around $5 below the long-term path priced into futures.”

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2 Stocks to Buy and Hold Forever – The Motley Fool Canada

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For part-time investors, it can be difficult to stay on top of your portfolio holdings. This is especially true during times of significant volatility. It is why investors should choose which stocks to buy carefully. 

If you don’t have the time to actively monitor your positions, owning over 50 stocks may not be the right approach. If you are holding a large portfolio in an effort to diversify, you may be over extending yourself. 

The purpose of diversification is to reduce unsystematic risk. Research has shown that the benefits of diversification tops out at around 30 positions. The diversification benefits only inch up marginally for every position added afterwards. 

Keeping all this in mind, what is the best approach for the part-time retail investors? Identify stocks to buy that can be held forever. These are best-in-class, blue chip stocks that will act as foundational stocks in a portfolio. 

Railway stocks to buy

The railway industry is dominated by two players, Canadian Pacific Rail (TSX:CP)(NYSE:CP) and Canadian National Railway (TSX:CNR)(NYSE:CNI). They form a duopoly and as such, have some of the widest moats in the country. 

Although both make excellent investments, the top stock to buy today is CN Rail. The railway is trading at 4.47  times book value, a steep discount to peer CP Rail (6.73). CN Rail’s debt burden is also much less, with a debt-to-equity ratio of 0.79. For its part, CP Rail’s D/E ratio is sitting at 1.28.

Similarly, CN Rail is a Canadian Dividend Aristocrat. It has a dividend growth streak that spans 24 years, the tenth longest in the country. At 1.94%, the yield is also double that of CP Rail (0.94%). Over the past decade, CN Rail has averaged 15.6% annual dividend growth. 

Looking forward, analysts are expecting a down year in 2020 – not surprising given the current pandemic. Still, the company is only expected to see earnings dip by about 8% before rebounding in a big way (+17%) in 2021.

CN Rail is one of the safest stocks to buy. You can buy without having to check up on the company daily to see if the investment thesis has changed. 

A top bank

In today’s environment, financial stocks are under pressure. Not even Canada’s Big Banks are immune, and most are sitting on significant losses. However, recent results are proving once again that Canada’s banks are resilient and are top stocks to buy — perhaps none more so than Royal Bank of Canada (TSX:RY)(NYSE:RY)

As Canada’s largest bank, it has the means to come out on the other side of this pandemic on solid footing. Just as it did during the Financial Crisis, it appears that RBC will escape the current pandemic with a dividend cut. 

Now yielding 4.84%, investors can lock in a yield close to record highs. During this pandemic, Royal Bank has been the best-performing bank. Despite losing 13.06% of its value, it is far outpacing the majority of its peers. 

Despite bouncing off March lows, Royal Bank is still trading at only 1.6 times book value and 11.44 times earnings. Both of which are below historical averages. 

RBC is proving once again to be a top stock to buy and is one of the best hold forever options for investors. Unless the entire economy and banking system goes belly up, investors can sleep well knowing Royal Bank is anchoring their portfolios with stable and reliable returns.

If you are looking for other top stocks to buy today, check out the attractive investment opportunities.

The 10 Best Stocks to Buy This Month

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Fool contributor Mat Litalien owns shares of Canadian National Railway. David Gardner owns shares of Canadian National Railway. The Motley Fool owns shares of and recommends Canadian National Railway. The Motley Fool recommends Canadian National Railway.

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Canadian major telcos effectively lock Huawei out of 5G build – ZDNet

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Image: Shutterstock

Canadian carriers Bell and Telus announced on Tuesday that each of them would not be continuing the use of Huawei equipment in their respective 5G networks, having signed deals with the Chinese giant’s rivals instead.

For Bell, it announced Ericsson would be supplying its radio access network. It added that it was looking to launch 5G services as the Canadian economy exited lockdown.

Bell, which in Febraury announced it had signed an agreement with Nokia, said it was maintaining the use of multiple vendors in its upcoming network, as it had for 4G.

“Ericsson plays an important role in enabling Bell’s award-winning LTE network and we’re pleased to grow our partnership into 5G mobile and fixed wireless technology,” said Bell chief technology officer Stephen Howe.

Meanwhile, the British Columbia-based Telus also chose to go with a combination of Ericsson and Nokia.

The company said it had spent CA$200 billion on its network since the turn of the century, and would part with a further CA$40 billion over the next three years to deploy its 5G network.

Both Bell and Telus had previously used Huawei equipment in their networks. In February, Telus told the Financial Post it would be using Huawei in its 5G network.

The third member of the Canadian major telco triumvirate — Rogers — said in January it would be using Ericsson equipment for its 5G rollout.

The decisions from Canada’s three major carriers now mean Huawei is increasingly isolated from 5G builds within the Five Eyes nations.

In Australia, Huawei has blamed its ban on supplying 5G equipment for a fall in its carrier business and net profit.

Huawei is also at the centre of the trade dispute between the United States and China, with Washington recently clamping down on Huawei’s semiconductor supply, with companies needing an export licence to sell to the Chinese giant.

Although not officially banned, Huawei has not made inroads in New Zealand after GCSB prevented Spark from using Huawei kit in November 2018.

Meanwhile in the United Kingdom, although it in January decided to limit the involvement of Huawei — restricting it to a 35% cap of all radio equipment and preventing the Chinese giant from supplying any equipment in the core of the network, as well as banning the use of Huawei equipment at sensitive locations such as nuclear sites and military bases — reports last month said that the decision would be reviewed.

Canada is also the centre of the furore involving the extradition of Huawei CFO Meng Wanzhou, following her arrest in December 2018.

Last week, the British Columbia Supreme Court ruled the extradition could proceed. CBC reported that the presiding judge ruled that the fraud that Meng has been accused of would be a considered a crime in Canada, as well as the United States.

Meng, the daughter of Huawei’s founder, is currently on bail where she is required to stay confined to one of her two Vancouver homes between 11pm and 6am. In the United States, Meng currently faces an indictment for allegedly misrepresenting Huawei’s ownership and control of its Iranian affiliate, Skycom, to banks, which breached UN, US, and EU sanctions.

Two Canadians, Michael Kovrig and Michael Spavor, who were detained by Chinese authorities soon after Meng’s arrest, recently clocked up 500 days in confinement.

“Not only are their conditions terrible but they are cut off from any meaningful connection and at this time of pandemic they seem to be even more remote,” former Canadian ambassador to China David Mulroney told The Globe and Mail.

“It’s a hostage-taking and the ransom demand is Meng Wanzhou.”

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Saudi Arabia And Russia Agree To Extend Production Cuts – OilPrice.com

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Saudi Arabia And Russia Agree To Extend Production Cuts | OilPrice.com

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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    Saudi Arabia and Russia have reached a preliminary agreement to extend the current level of the OPEC+ production cuts by one month, provided that the laggards in compliance ensure over-compliance going forward to compensate for flouting their quotas so far, OPEC sources told Reuters on Wednesday.  

    “Any agreement on extending the cuts is conditional on countries who have not fully complied in May deepening their cuts in upcoming months to offset their overproduction,” an OPEC source told Reuters.

    According to the original agreement reached in April, OPEC+ was to cut 9.7 million bpd in combined production for two months—May and June—and then ease these to 7.7 million bpd, to stay in effect until the end of the year. Then, from January 2021, the production cuts would be further eased to 5.8 million bpd, to remain in effect until end-April 2022.

    Despite weak compliance from OPEC in May, as per a Reuters survey, the market expects that the OPEC+ coalition is motivated enough to extend the 9.7-million-bpd cuts through July or August. 

    On Monday, reports emerged that the OPEC+ group could hold its June meeting this week, earlier than the initial plans to hold the teleconference on June 9 and 10.  Related: Petrobras Oil Stockpiles Are “Paradoxically” Low

    However, an earlier meeting is being held up by the fact that the leaders of the pact, Saudi Arabia and Russia, will be seeking assurances from all non-compliant members that they will over-comply going forward to compensate for the loose compliance in May, an OPEC delegate told Argus today. According to the delegate, there will be “no free ride” for non-compliant members in the OPEC+ deal. These producers likely include Iraq and Nigeria from OPEC and Kazakhstan from non-OPEC.

    OPEC’s second-largest producer and the biggest laggard in the output cuts, Iraq, said on Tuesday that it would further reduce production and that it remains committed to the OPEC+ pact.

    Oil prices retreated following the reports of a one-month extension, after earlier on Wednesday prices had hit nearly three-month highs, with Brent Crude breaking above $40 a barrel.   

    By Tsvetana Paraskova for Oilprice.com

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