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OPEC Is On The Brink Of A Crisis – OilPrice.com

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OPEC+ Is On The Brink Of A Crisis | OilPrice.com

Cyril Widdershoven

Dr. Cyril Widdershoven is a long-time observer of the global energy market. Presently, he holds several advisory positions with international think tanks in the Middle…

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The OPEC+ member countries are on the brink of a financial crisis if the latest assessments of the International Monetary Fund (IMF) are accurate. The IMF has presented a very bleak outlook for an economic recovery in the Middle East and Central Asia, predicting a 4.1% contraction for the region. The main driving factor behind this bearish outlook is the IMF’s forecast that oil prices will remain in the $40 to $50 range in 2021. An extension of the current low oil price environment for another year would badly hurt oil and gas exporting countries, which includes all of the OPEC+ members. In its statement, the IMF predicted an economic contraction of 2.8% in April for the Middle East and Central Asia. IMF director Jihad Azour highlighted a large disparity in the projected economic loss of oil-importing and exporting countries, forecasting a negative 6.6% growth for oil-exporting countries, compared to a contraction of 1.3% for oil-importing countries. With many of the OPEC+ members being rentier-states, the need for higher oil prices cannot be overstated. A vast part of the government budgets of OPEC member states depends on oil and gas-related revenues. As such, all OPEC countries are looking at significant budget deficits this year, especially Saudi Arabia, the UAE, Bahrain, Iraq, Iran, and Kuwait. Former OPEC member Qatar is in a similar situation, even as it tries to mitigate the damage by increasing its LNG exports. As both oil and gas demand has seen significant demand destruction this year, prices for both have plunged. At present, Brent oil prices are still 40% below their pre-COVID levels.  There is little hope of a significant rise in prices any time soon as global oil and gas storage volumes are still at historically high levels, and demand looks set to dip again due to new COVID-related lockdowns and a further economic recession. The frequently cited breakeven price for the Saudi government budget is $80 per barrel, although Saudi government budget discussions seem to revolve around an oil price of $50. Iraq has also stated that it expects price levels of $50 per barrel for 2021. These optimistic predictions seem to be based solely on Chinese post-Covid economic figures, which have proven to be highly untrustworthy and don’t take into account the fact that global demand for Chinese products will also need to pick up. The impact of the second wave of COVID cases in Europe and America will undoubtedly hurt this demand for Chinese goods. Related: Biden’s $2 Trillion Energy Plan Could Crush Natural Gas

But of all the parties that will suffer from low oil prices and the continued impact of a global pandemic, OPEC+ members will suffer the most. Some oil and gas producers were already in a dire financial situation before COVID, including Libya and Venezuela. The major oil market contango and storage glut has been largely overlooked recently, but it still very much exists. Reports of demand recovery in some markets appear to be more wishful thinking spurred by multi-trillion-dollar cash injections rather than a viable economic recovery. OPEC and the IEA both agree that demand is still fledgling, having both cut world oil demand forecasts. The IEA cut its outlook for worldwide oil demand to 91.7 million barrels per day this year while OPEC brought its forecast down to 90.2 million in 2020. OPEC reiterated that future cuts could still be made.

With the financial environment outlined above, OPEC+ members can no longer afford to base their economic stability and future on hydrocarbons alone. Economic diversification has to be put in place, even if the effects won’t be felt for years. Government budget cuts are imminent and could destabilize the region if not done prudently. OPEC+ discussions on stabilizing the market should not be focused at present on price levels or market share only. The real question is how to create a market that is resilient enough to cope with Black Swan events without toppling the current ruling elite. Instability is not only increasing in the Arab producer regions, but also in Russia where sanctions and low oil prices are taking their toll.

OPEC+ members cannot simply bet on the death of U.S. shale as it is an industry that has proven incredibly hard to kill over the years. U.S. shale will almost certainly reemerge, possibly in a different form, but it is reasonable to assume the sector itself is far from dead. Leaders in Riyadh, Abu Dhabi, Moscow, and Kuwait City now have to find a way to survive. With oil at $50 per barrel in 2021, some OPEC members will be in a real crisis. With that in mind, a conventional OPEC+ JMMC statement today or tomorrow will be seen by some as a white flag.

By Cyril Widdershoven for Oilprice.com

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Black Friday shopping in a pandemic: COVID-19 closes some stores, sales move online – CTV News

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Black Friday, the one-day shopping bonanza known for its big bargains and large crowds, has arrived.

While rising COVID-19 cases and weeks of staggered deals have muted the usual fanfare of the shopping event, retailers are banking on today’s sales to bolster their bottom line.

Retail analysts say some bargain hunters are still expected to shop in brick-and-mortar stores, where possible, in the hopes of snagging a doorbuster deal.

But they say the majority of this year’s Black Friday purchases are expected to be made online.

Eric Morris, head of retail at Google Canada, says e-commerce in Canada has doubled during the pandemic.

He says given ongoing lockdowns and in-store capacity limits, online sales are expected to be strong today and remain heightened over the holiday shopping season.

Indeed, big box stores, which often attract the largest lineups and crowds on Black Friday, have moved most promotions online.

Yet although Black Friday’s top sellers tend to be big-ticket electronics, some shoppers might be on the hunt for deals on more basic items.

Lisa Hutcheson, managing partner at consulting firm J.C. Williams Group, says some shoppers may take advantage of today’s sales to “stock up and hunker down for the winter.”

Black Friday, which started as a post-Thanksgiving sale in the United States, has gained in popularity in Canada in recent years.

It’s also become an increasingly important sales event for retailers, along with Cyber Monday, overshadowing Boxing Day.

Robin Sahota, managing director and Canadian retail lead for professional services firm Accenture, says retailers might be saving some special discounts for Cyber Monday.

“It’s going to be a day where retailers look to add some sweeteners to entice consumers, particularly with the pull forward of Black Friday,” he says. “I think folks will be seeking out something special on Cyber Monday.”

This report by The Canadian Press was first published Nov. 27, 2020.

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Black Friday shopping in a pandemic: COVID-19 closes some stores, sales move online – CP24 Toronto's Breaking News

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The Canadian Press


Published Friday, November 27, 2020 5:52AM EST


Last Updated Friday, November 27, 2020 7:21AM EST

Black Friday, the one-day shopping bonanza known for its big bargains and large crowds, has arrived.

While rising COVID-19 cases and weeks of staggered deals have muted the usual fanfare of the shopping event, retailers are banking on today’s sales to bolster their bottom line.

Retail analysts say some bargain hunters are still expected to shop in brick-and-mortar stores, where possible, in the hopes of snagging a doorbuster deal.

But they say the majority of this year’s Black Friday purchases are expected to be made online.

Eric Morris, head of retail at Google Canada, says e-commerce in Canada has doubled during the pandemic.

He says given ongoing lockdowns and in-store capacity limits, online sales are expected to be strong today and remain heightened over the holiday shopping season.

Indeed, big box stores, which often attract the largest lineups and crowds on Black Friday, have moved most promotions online.

Yet although Black Friday’s top sellers tend to be big-ticket electronics, some shoppers might be on the hunt for deals on more basic items.

Lisa Hutcheson, managing partner at consulting firm J.C. Williams Group, says some shoppers may take advantage of today’s sales to “stock up and hunker down for the winter.”

Black Friday, which started as a post-Thanksgiving sale in the United States, has gained in popularity in Canada in recent years.

It’s also become an increasingly important sales event for retailers, along with Cyber Monday, overshadowing Boxing Day.

Robin Sahota, managing director and Canadian retail lead for professional services firm Accenture, says retailers might be saving some special discounts for Cyber Monday.

“It’s going to be a day where retailers look to add some sweeteners to entice consumers, particularly with the pull forward of Black Friday,” he says. “I think folks will be seeking out something special on Cyber Monday.”

This report by The Canadian Press was first published Nov. 27, 2020.

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Stocks hover near record high, oil skids on demand outlook – Reuters

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TOKYO (Reuters) – Asian shares stalled near record highs on Friday as investors weighed renewed doubts about a highly-anticipated coronavirus vaccine against hopes that some of the region’s economies will recovery quicker than their Western peers.

FILE PHOTO:The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, November 26, 2020. REUTERS/Staff

MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.04% but remained with striking distance of a life-time peak touched this week.

Australian shares ended down 0.53%. Treasury Wine Estates Ltd tumbled by 11.25% after China slapped tariffs on Australian wine, which is likely to worsen a diplomatic row between Beijing and Canberra.

Japan’s Nikkei rose 0.33% in choppy trade.

Shares in China rose 0.13% after data showed Chinese industrial profits surged at the fastest pace since early 2017. South Korean stocks also rose 0.27%.

U.S. S&P 500 e-mini stock futures fell 0.09%. U.S. financial markets were closed on Thursday for the Thanksgiving holiday and will trade on a partial schedule later on Friday.

Euro Stoxx 50 futures were down 0.26%, German DAX futures fell 0.24%, and FTSE futures were down 0.22%, suggesting a soft start to the European session.

U.S. oil prices extended their declines from a seven-month high due to signs of oversupply.

British drugmaker AstraZeneca’s coronavirus drug was touted as a “vaccine for the world” due to its inexpensive cost, but the efficacy of the vaccine is now facing more intense scrutiny, which experts say could delay its approval.

Several scientists have raised doubts about the robustness of results showing the shot was 90% effective in a sub-group of trial participants who, by error initially, received a half dose followed by a full dose.

“With global case numbers having now topped 60 million… there is certainly some rough terrain ahead for the global recovery, and that can create economic scarring,” analysts at ANZ Bank wrote in a memo.

MSCI’s broadest gauge of world stocks was up 0.08% on Friday, sitting just below a record high reached in the previous session.

Concerns about the distribution of a coronavirus vaccine have placed renewed focus on the current state of the pandemic, which looks grim for many places.

U.S. hospitalizations for COVID-19 are at a record and experts warn that Thanksgiving gatherings could lead to further infections and deaths.

More than 20 million people across England will be forced to live under the toughest restrictions even after a national lockdown ends on Dec. 2. Partial lockdowns in some European countries have also raised concern about economic growth.

The European Central Bank’s chief economist highlighted these concerns in dovish comments on Thursday, which pushed European bond yields lower.

The euro, which last bought $1.1924, showed little reaction because currency traders have largely priced in expectations for additional ECB easing next month.

The dollar index fell toward its lowest in more than two months.

The yield on benchmark 10-year Treasury notes fell to 0.8586% as some investors sought the safety of holding government debt.

U.S. crude dipped 1.82% to $44.88 a barrel. Brent crude fell 0.17% to $47.72 per barrel.

Fuel demand is falling due to renewed coronavirus lockdowns, but some oil producers are not complying with agreed production cuts, which raises concerns about oversupply.

Bitcoin, the world’s biggest cryptocurrency, edged up to $17,256 on Thursday, but it tumbled by 8.4% in the previous session after failing to take out its record high of $19,666.

The cryptocurrency showed little reaction to a report in the Financial Times that Facebook will launch its own Libra digital currency in limited format next year.

Bitcoin has rallied around 140% this year, fuelled by demand for riskier assets.

Reporting by Stanley White; editing by Richard Pullin, Lincoln Feast and Kim Coghill

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