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Will U.S. Shale Survive If Oil Hits $40 – OilPrice.com

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Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Within a month, the U.S. oil benchmark West Texas Intermediate recorded two first-of-a-kind events. First, it fell below zero on April 20. Then, it soared up so high it is about to book its best month ever, CNBC’s Pippa Stevens noted in a recent commentary. Still, many analysts and other observers remain wary of any premature optimism. 

They have a good reason to be.

WTI is now trading at close to $35 a barrel. That’s up from less than $13 a barrel a month ago. Marked improvement is one way you could frame this–an incredible rally is another. And yet this rally did not happen on its own. It followed a fast reduction in production and the gradual lifting of lockdowns across the States and elsewhere as many parts of the world concluded that the worst of the coronavirus pandemic is over. 

With such a significant cut in oil production and improving oil demand, it should be only a matter of time before prices rebound to pre-crisis levels of over $50 a barrel. 

Or it would have been, had the situation been ordinary, which it isn’t. Demand may be improving, but it is not improving as fast as oil bulls would have liked. In fact, as Forbes’Gaurav Sharma forecast in a recent analysis of the market, the best that the bulls can hope for in the near term is $40 a barrel, and not before the third quarter. Expectations of WTI back to $50 or $60 are currently unrealistic, therefore, but not unrealistic over the longer term. Granted, times right now are volatile. Nobody can say whether there would be a second wave of Covid-19 infections on a wider-than-regional-China scale. That’s one great uncertainty that is pressuring prices. Then, nobody can say whether there would not be a second price war within OPEC+ or between OPEC+ and other producers, notably the United States. According to energy journalist Frank Kane, another price war is just a few dollars per barrel away.

Related: The Risky Road To Oil Demand Recovery

With so much uncertainty around, it is no wonder the rebound in WTI—or Brent crude, for that matter—has not been greater. Even good news on the demand side, including an increase in Chinese oil imports and plans for expanding oil storage capacity, has not been enough to push prices much higher than $30 a barrel. In fact, even a statement from the International Energy Agency’s head saying that oil demand has yet to peak has not been able to do that.

“In the absence of strong government policies, a sustained economic recovery and low oil prices are likely to take global oil demand back to where it was, and beyond,” Fatih Birol, Executive Director of the IEA, told Bloomberg earlier this week.

However, not all from the industry agree with this. BP’s chief executive, Bernard Looney, for instance, told the Financial Times this month that we may be nearing peak oil.

“I don’t think we know how this is going to play out. I certainly don’t know,” Looney said. “Could it be peak oil? Possibly. Possibly. I would not write that off.”

Uncertainty, in other words, is the strongest feature in today’s oil markets and likely to remain their strongest feature for a while. Meanwhile, the supply of oil may be shrinking more permanently than previously believed. If so, this would contribute to the upside potential of oil prices.

Bankruptcies in the U.S. shale patch are rising. Seventeen companies have already filed for Chapter 11 protection since the start of the year, the FT reported. Still, many more bankruptcies are on the way, with Rystad Energy estimating that as many as 73 shale drillers could be forced into bankruptcy by the end of the year.

This will limit production for longer, or until these companies’ fellow drillers become profitable again, which is when production will start to rise. If this happens before demand has firmly come back, there will be another price slump. The problem is that no one knows if or when demand will firmly come back.

By Irina Slav for Oilprice.com 

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Israel to offer COVID-19 booster shot to fully vaccinated people 60 and older – The Globe and Mail

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Israel’s prime minister on Thursday announced that the country would offer a coronavirus booster to people over 60 who have already been vaccinated.

The announcement by Naftali Bennett makes Israel, which launched one of the world’s most successful vaccination drives earlier this year, the first country to offer a third dose of a Western vaccine to its citizens on a wide scale.

“I’m announcing this evening the beginning of the campaign to receive the booster vaccine, the third vaccine,” Bennett said in a nationally televised address. “Reality proves the vaccines are safe. Reality also proves the vaccines protect against severe morbidity and death. And like the flu vaccine that needs to be renewed from time to time, it is the same in this case.”

The decision comes at a time of rising infections and signs that the vaccine’s efficacy dwindles over time.

Anyone over 60 who was vaccinated more than five months ago will be eligible. Bennett said the country’s new president, Isaac Herzog, would be the first to get the booster on Friday. It will be offered to the general public on Sunday.

Bennett, who is 49, said his first call after the news conference would be to his mother to encourage her to get her booster shot.

Neither the U.S. nor the EU have approved coronavirus booster shots. It’s not yet proven if a third dose helps and, if so, who needs one and when.

But Bennett said that a team of expert advisers had agreed overwhelmingly, by a 56-1 margin, that it made sense to launch the booster campaign. He said the recommendation was made after “considerable research and analysis” and that its information would be shared around the world. Preliminary studies in Israel have indicated the vaccine’s protection against serious illness dropped among those vaccinated in January.

“The findings show that there is a decline in the body’s immunity over time, and the purpose of the booster is to restrengthen it, thus significantly reducing the chances of infection and serious illness,” Bennett said.

Israel has used the Pfizer-BioNtech vaccine on its population. Previously, boosters were used in some countries with the Chinese and Russian vaccines.

Early this year, Israel carried out one of the world’s most aggressive and successful vaccination campaigns, reaching a deal with Pfizer to purchase enough vaccines for its population in exchange for sharing its data with the drug maker.

Over 57 per cent of the country’s 9.3 million citizens have received two doses of the Pfizer-BioNTech vaccine, and over 80 per cent of the population over 40 is vaccinated.

The vaccination program allowed Israel to reopen its economy ahead of other countries. But Israel has seen a spike in cases of the new delta variant, even among people who are vaccinated. Bennett urged unvaccinated Israelis, especially younger people who have been hesitant, to get vaccinated immediately.

Earlier this month, Israel started giving individuals with weakened immune systems a third shot to increase their resilience against COVID-19.

Pfizer said Wednesday that the effectiveness of the vaccine drops slightly six months after the second dose. Pfizer and its German partner BioNTech have said they plan to seek authorization for boosters in August.

The World Health Organization said earlier this month that there is not enough evidence to show that a third dose is needed.

The agency’s officials have appealed for wealthier countries to share vaccines with poorer nations that have yet to immunize their people, instead of using them as boosters. Israel itself has come under criticism for not sharing more of its vaccines with the Palestinians.

The Israeli Health Ministry recorded at least 2,165 new coronavirus cases on Thursday, following an accelerating rise in infections over the past month. Serious cases of COVID-19 have grown from 19 a day in mid-June to 159 as the highly infectious delta variant has spread.

Thanks to its successful vaccination campaign, Israel lifted almost all of its coronavirus restrictions this spring. But with new cases back on the rise, the country has tried to halt the spread of the highly infectious delta variant by reimposing limitations on gatherings, restoring a “green pass” system for vaccinated people to enter certain enclosed spaces, and an indoor mask mandate.

Facebook’s new video series, Let Me Explain, discusses various topics related to safety and integrity on its platforms. Supplied by Facebook

Sign up for the Coronavirus Update newsletter to read the day’s essential coronavirus news, features and explainers written by Globe reporters and editors.

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Early Robinhood investor Jason Calacanis on trading app's imminent IPO – CNBC Television

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Robinhood Flirts With Worst Debut Ever for IPO of Its Size – BNN

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(Bloomberg) — Robinhood Markets Inc. wanted to make history with its initial public offering, and now it might — for the wrong reason.

Shares in the broker behind the meme-stock revolution fell as much as 12% below the IPO price in the company’s first trading session. That puts the stock in the running to rank as the worst debut on record among U.S. firms that raised as much cash as Robinhood or more, according to data compiled by Bloomberg.

Shares rebounded and were last trading 1% lower at $37.52 mid-afternoon in New York.

Robinhood must finish Thursday’s session at $34.90 or higher, or else it will replace the 2007 IPO by another brokerage, MF Global Holdings Ltd., as the worst debut among qualifying firms. MF Global ended its first day down 8.2%.

Read more: Robinhood Loses More Ground in Trading Debut After Muted IPO

The stock opened at the $38 initial public offering price. For an IPO of Robinhood’s size and larger, that’s the weakest opening trade since Uber Technologies Inc. in May of 2019 among U.S. firms. Uber finished its debut session down 7.6%.

©2021 Bloomberg L.P.

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