In the Physical Oil Market, Sour Barrels Trade at Sweet Prices By Bloomberg



© Reuters. In the Physical Oil Market, Sour Barrels Trade at Sweet Prices

(Bloomberg) — Leaving behind the waters of the Caribbean Sea, the 1,100-feet long oil tanker Maran Apollo is emblematic of the wider petroleum market.

Steaming at 11.5 knots, she’s heading toward China, where oil demand is fast recovering, hauling a cargo of two million barrels of . But her voyage didn’t start a few days ago. She loaded in early May, and with no buyers during the worst of the coronavirus outbreak, the supertanker stood floating in the U.S. Gulf of Mexico for almost two months, waiting for better times.

Only a few days ago, she weighed anchor and left for the Chinese port of Rizhao — a sign that refiners are starting to pull in crude that went unwanted for months.

It’s not any kind oil on board, though. Refiners are competing for barrels in one corner of the market known as medium-heavy sour crude — barrels with a higher content in sulfur and relatively dense. It’s the kind of oil that Saudi Arabia and its allies pump. And also the type of crude that’s pumped offshore in the U.S. Gulf of Mexico — and that’s what’s in the Maran Apollo’s tanks.

Like the wine industry, the oil market has its own vintages: global refiners seek their barrels much like connoisseurs covet bottles of Bordeaux and Burgundy. Urals of Russia and Arab Light from Saudi Arabia are normally two of the most widely consumed — think Cabernet Sauvignon, maybe a Merlot. But in today’s oil market, such crude is in increasingly short supply due to record output cuts by the two nations and their allies.

“Deep OPEC+ cuts and demand recovery have tightened balances and this has been reflected in improvements in physical differentials,” said Bassam Fattouh, director of the Oxford Institute for Energy Studies. “But the recovery has not been even, with medium-sour crudes faring better than light-sweet crudes.”

In normal times, medium-sour crude is usually cheaper than other streams, particularly those known as light sweet crude that have a lower sulfur content and are less dense.

But OPEC, which pumps mostly medium-sour crude, has cut output to the lowest since 1991, and Russia has also implemented brutal reductions. On top of that, medium and heavy sour crude accounts for the bulk of the supplies from Iran and Venezuela, where production has collapsed under the weight of U.S. sanctions and lack of investment.

The market is reflecting the under supply. The price of Urals, Russia’s flagship grade, has surged to a record premium to the benchmark. Last week, it briefly changed hands at $2.40 a barrel above Dated Brent, a regional benchmark, compared with a discount of more than $4.50 a barrel in April, according to traders. S&P Global Platts, a price-reporting agency, assessed the grade at a premium of $1.90 for delivery to Rotterdam on June 29, matching a prior record high.

The surge means that Urals is selling in Rotterdam, the main oil refinery hub in northwest Europe, at roughly $45 a barrel, compared with a low point of about $15 a barrel in early April.

The price pattern is similar for other sour crude streams, from Oman in the Middle East to Oriente in Latin America. All are commanding hefty prices at a time when oil demand globally remains down roughly 10% below normal levels. Because sour crude makes a significant chunk of a typical refinery’s diet, the price increase is strangling the plants’ profitability.

“OPEC+ continues to tighten the screws,” Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd. said, referring to the group’s output cuts.

With the physical oil market tightening, OPEC is now able to increase the prices it charges to refiners. On Monday, Saudi Aramco (SE:), the state-owned oil company, lifted its official selling prices to Asia for the third consecutive month, largely reversing all the discounts it offered during a brief price war with Russia in March and April.

Aramco and other national oil companies sell their crude at differentials to oil benchmarks, announcing every month the discount or premium they’re charging to global refiners. These so-called official selling prices help set the tone in the physical oil market, where actual barrels change hands.

The Saudi oil giant is now selling its most dense crude, called Arab Heavy, for the first time ever, at roughly the same price at its flagship Arab Light, an indication of the strength of the market for the medium-heavy sour grades. Typically, Arab Heavy has sold at a discount of about $2-to-$6 a barrel to Arab Light.

Not only is medium-heavy sour crude trading at a premium to benchmarks, but barrels for immediate delivery are commanding premiums to forward contracts, a price pattern known as backwardation that also reflects a tight physical-market. Dubai crude, a Middle Eastern medium sour barrel, is one example: backwardation between barrels for delivery now and in three months has surged to 60 cents per barrel. In mid-April it stood at minus $9.24 per barrel because the physical market was so glutted back then.

©2020 Bloomberg L.P.



Banks urge Britain and EU to sort out financial market access By Reuters



© Reuters. FILE PHOTO: British PM May meets German Chancellor Merkel to discuss Brexit in Berlin

By Huw Jones

LONDON (Reuters) – Britain and the European Union need to make progress on EU financial market access given that the coronavirus crisis will make it even harder to cope with potential disruption if there is no agreement, banking lobby AFME said on Monday.

Britain left the EU in January but has full access to the bloc under a transition period that runs until the end of December.

London and Brussels blamed each other last week for missing a June 30 deadline for assessments on financial market access from January.

Future direct EU access will depend on whether Brussels deems UK regulation to be “equivalent” to standards in the bloc.

Although it is far more limited than current access, without equivalence EU investors would not be able to use financial services in London.

“COVID-19 has the potential to disrupt Brexit planning including impacting client readiness, as well as potentially affecting the ability of firms to relocate staff to other jurisdictions,” AFME said in a statement.

AFME said ensuring that EU investors can continue using clearing houses in London needed addressing before the end of September to avoid customers having to move derivatives positions elsewhere.

Two-way access in stock and derivatives trading was also needed to avoid disruption, AFME said.

AFME called for a formal framework for UK and EU regulators to iron out differences that could jeopardise access.

“This is particularly important in the context of the fast-evolving legislative agenda in the EU and the UK with a number of significant financial services files being proposed, due to be implemented, or under review in the second half of this year and the first half of 2021,” AFME said.

The EU’s chief Brexit negotiator Michel Barnier said last week that financial firms must get ready for big changes in January.

“We will only grant equivalences in those areas where it is clearly in the interest of the EU, of our financial stability, our investors and our consumers,” Barnier said.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Top 5 Things to Know in the Market on Friday, June 26th By Investing.com



© Reuters.

By Geoffrey Smith 

Investing.com — The U.S. posted a new record high for Covid-19 infections, prompting Texas and Florida to pause their reopenings. ECB President Christine Lagarde said the worst of the pandemic was over in Europe but warned the recovery would be uneven. U.K. markets rose as the country abandoned its plans to quarantine people arriving from abroad. The Fed said banks could face $700 billion of loan losses from the pandemic and told them not to buy back stock for another three months. Stocks are set to open mixed, with the spreading row over Facebook (NASDAQ:) and its advertisers in focus. Here’s what you need to know in financial markets on Friday, June 26th.

1. Fed caps bank payouts

The Federal Reserve warned that a prolonged downturn caused by the Coronavirus pandemic could leave the banking sector sitting on $700 billion of losses on bad loans.

Announcing the results of its annual stress test, the Fed said that while banks were well-enough capitalized to absorb such losses, it wanted to ensure they stayed that way.

As a result, it ordered banks not to buy back stock in the third quarter (the banks themselves chose not to buy back stock during the last three months). The Fed also capped the dividends they can pay out at the level of their average quarterly profit over the last four quarters.

Banking stocks fell in after-hours trading and are set to open between 1.2% and 2.7% lower, with Wells Fargo (NYSE:) – the bank most exposed to the dividend cap as formulated – being the worst hit.

2. Record infections halt reopening

The U.S. posted 37,000 new Covid-19 cases on Thursday, a new daily record, as the outbreaks in California, Texas, Florida and Arizona continued to spread.

Texas and Florida put the reopening of their economies on hold in response to the surge in new infections of Covid-19 over the last few days. However, neither state – the second and fourth-largest in the U.S. by population – has tightened restrictions on activity yet.

Texas healthcare CEOs played down reports of local hospitals, notably in Houston, reaching their maximum capacity for intensive care, saying that there are options available to increase it. Governor Greg Abbott mandated hospitals in Harris and three other counties to postpone elective surgery to free up resources. The loss of high-margin elective surgery is increasingly cropping up as a factor hitting hospitals’ financial performance.

Elsewhere, the Trump administration asked the Supreme Court to strike down the Obama-era Affordable Care Act.

3. Stocks set to open mixed, Facebook, Amazon eyed

U.S. stock markets are set to open mixed and are still on course for a weekly loss amid fears of new restrictions on the economy to contain the virus. White House officials and state governors remain publicly opposed to a new round of lockdowns, however.

By 6:30 AM ET (1030 GMT), the Dow Jones 30 futures contract was up down points or 0.2%, while the S&P 500 futures contract was flat and the contract was up 0.2%.

Stocks in focus later are likely to include Facebook, after Verizon (NYSE:) joined a list of companies intending to boycott its social media networks in protest at its hands-off approach to hate speech and disinformation.  Amazon.com (NASDAQ:) will also be of interest, after agreeing to buy autonomous driving startup Zoox for $1.2 billion.

4. Lagarde says the worst is over

European Central Bank President Christine Lagarde told an online conference that the worst of the pandemic is probably over, at least in Europe, which has reported stable infection rates for over a month since starting to lift its lockdown measure in May.

However, she warned that the recovery is likely to be uneven and ‘transformational’, noting that the pandemic could kill off companies whose businesses were already in long-term decline. European governments have generally not discriminated in handing out subsidies to all parts of their economies since March, hence Lagarde’s words imply a warning against pumping endless money into ‘zombie’ companies.

The euro was largely unchanged against the dollar at $1.1227.

The ECB said earlier that eurozone M3 money supply and bank lending grew faster than expected in May, as banks pushed out the ECB’s monetary stimulus into the real economy.

5. U.K. abandons quarantine plan

The U.K. abandoned its plan to impose a 14-day quarantine on visitors arriving from abroad as part of its strategy to tackle the coronavirus epidemic.

The government’s decision came under pressure from the travel industry, which had threatened legal action to stop the plan, which it said would cause thousands of job losses, not least across the tourism sector.

It’s the latest in a series of decisions that have shown the British government tending to relax its pandemic measures with an eye to minimizing the harm to the economy. The OECD and International Monetary Fund both expect the U.K. to be the worst-hit of all G7 economies this year.

The pound pared earlier gains to be flat against the dollar, while the rose 1.6%, the best performer among major European markets on Friday.



U.S. labor market, economy struggle despite reopening of businesses By Reuters


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© Reuters. FILE PHOTO: People line up outside a Kentucky Career Center hoping to find assistance with their unemployment claim in Frankfort

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By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing claims for unemployment benefits fell moderately last week as a second wave of layoffs partially offset hiring by businesses reopening, suggesting the labor market could take years to recover from the COVID-19 pandemic.

Other data on Thursday reinforced expectations the economy would contract in the second quarter at its deepest pace since the Great Depression. Though orders for key capital goods rebounded in May, the increase recouped only a fraction of the prior declines. The goods trade deficit widened sharply last month as the respiratory illness disrupted trade further.

“All is not well in this economy,” said Chris Rupkey, chief economist at MUFG in New York. “While it counts as good news that businesses are ordering more equipment in May as the states reopened, the second wave of the pandemic may keep companies cautious in the months ahead when it comes to making new investments in the country’s future.”

Initial claims for state unemployment benefits fell 60,000 to a seasonally adjusted 1.48 million for the week ended June 20, the Labor Department said. There was a jump in claims in California, which together with Texas and Florida, has seen a surge in novel coronavirus cases. Economists polled by Reuters had forecast 1.3 million applications in the latest week.

Claims have dropped from a record 6.867 million in late March, but they remain more than double their peak during the 2007-2009 Great Recession. The report, the most timely data on the economy’s health, also showed 30.6 million people were receiving unemployment checks in the first week of June, about a fifth of the labor force.

Businesses in many states reopened more than a month ago after shuttering in mid-March to try to slow the spread of COVID-19. Companies are hiring, but others are cutting jobs at nearly the same pace.

The economy slipped into recession in February. From manufacturing to the transportation, retail and leisure and hospitality industries, companies are restructuring to adapt to a vastly changed landscape, leading to layoffs and bankruptcies.

State and local governments, whose budgets have been squeezed by the COVID-19 fight, are also cutting jobs.

High unemployment is undercutting demand, with ripple effects on business investment, which contracted in the first quarter at its sharpest pace since mid-2009.

A separate report from the Commerce Department showed orders for non-defense capital goods excluding aircraft, a proxy for business spending plans, increased 2.3% in May after dropping 6.5% in April. These so-called core capital goods orders are 5.6% below pre-pandemic levels.

The surge in coronavirus infections threatens the nascent improvement in business investment. Energy companies slammed the brakes on returning staff to their Houston offices as COVID-19 cases soared and top hospitals warned they could soon run out of beds for the most severely ill patients.

The pandemic is upending the flow of goods. In another report, the Commerce Department said the goods trade deficit jumped 5.1% to $74.3 billion in May. Exports tumbled 5.8% while imports decreased 1.2%. With imports declining again, retailers and wholesalers drew down inventories.

Economists expect GDP could shrink at as much as a 46% annualized rate in the second quarter. The economy contracted at a 5% pace in the January-March quarter, the deepest downturn since the Great Recession.

Major U.S. stock indexes were trading slightly higher, led by gains in shares of financial and energy companies. The dollar () was higher versus a basket of currencies. U.S. Treasury prices rose.

STALLED PROGRESS

The number of people receiving benefits after an initial week of aid fell 767,000 to 19.522 million in the week ending June 13. These so-called continued claims, reported with a one-week lag, are down from a record 24.912 million in early May.

Economists credit the drop to the government’s Paycheck Protection Program, which gives businesses loans that can be forgiven if used for wages.

The continuing claims data covered the week that the government surveyed households for June’s unemployment rate.

The jobless rate has been biased down since March by people incorrectly misclassifying themselves as being “employed but absent from work.”

Without this problem, which the Labor Department is working to correct, the unemployment rate would have been 16.3% in May instead of 13.3% and would have peaked at about 19.7% in April.

The government has expanded eligibility for unemployment benefits to include the self-employed and independent contractors who have been affected by the pandemic, including through lost employment, reduced hours and wages.

These claims are not included in the regular state unemployment insurance, understating the magnitude of labor market distress. About 33 million people are currently claiming benefits under all programs.

“These claims foreshadow a June jobs report that may fail to meet the high expectations set by the May report,” said Andrew Stettner, senior fellow at The Century Foundation in New York.



Top 5 Things to Know in the Market on Thursday, June 25th By Investing.com




By Geoffrey Smith 

Investing.com — A surge in new cases of coronavirus in the U.S. leads to New York imposing a quarantine on out-of-state arrivals, while a closely-watched academic model raises its forecast for the U.S. death toll to 180,000 by October. That’s putting the skids under stocks, which are struggling to bounce from Wednesday’s sell-off, the worst in two weeks. Markets face a challenge from the release of the weekly jobless claims reports and first-quarter GDP. It’s also putting the skids under oil and even gold. Meanwhile in Europe, payments company Wirecard becomes the first-ever DAX member to file for bankruptcy, but Lufthansa averts the same fate after shareholders accept the terms of a government bailout. Here’s what you need to know in financial markets on Thursday, June 25th.

1. U.S. epidemic spirals out of control again

The U.S. recorded over 34,000 new cases of Covid-19, approaching levels last seen at the high point of the epidemic in April.

New York, Connecticut and New Jersey to impose a 14-day quarantine on visitors arriving from the worst-affected states, a new development given that the U.S. had only previously imposed such restrictions on arrivals from abroad.

Florida and Texas both reported record new case numbers, while officials in Houston said that the city’s intensive care facilities would be maxed out today.

The University of Washington in Seattle raised its forecast for the U.S. death toll to 180,000 by October from around 122,000 currently.

2. Jobless claims, GDP, Durable Goods data all due

The U.S. will present its weekly figures for initial and continuing jobless claims at 8:30 AM ET (1230 GMT), with the number of new claims again expected to have fallen only marginally to 1.30 million, from 1.508 million a week earlier.

Continuing claims are expected to have fallen below 20 million for the first time since April – but that was also true ahead of the previous week’s report.   

The government will also announce revisions to its estimate of first-quarter gross domestic product. The number is of largely historical interest, given that the coronavirus barely touched the U.S. economy in March. Durable goods orders for May, to be released at the same time, will be more up-to-date information on the state of the economy, but will also be subject to high short-term volatility.

3. Stocks set to open mixed; Fed stress tests eyed

U.S. stock markets are set to open mixed after suffering their worst day since June 11 in response to the surge in Covid-19 cases across much of the country.

By 6:30 AM ET (1030 GMT), the Dow Jones 30 Futures contract was down 106 points or 0.4%, while the S&P 500 futures contract was down 0.3% and the contract was outperforming modestly, being up less than 0.1%.

Stocks in focus on Thursday will include the banks, who face the results of the Fed’s annual stress tests later in the day. The open question is whether the likelihood of a rise in bad loans due to the pandemic leads the Fed to impose restrictions on shareholder payouts and staff bonuses.

There will also be quarterly updates from JC Penney (OTC:), currently negotiating its way through Chapter 11 proceedings, and – after the closing bell – Nike (NYSE:).

4. Wirecard succumbs, while Lufthansa accepts bailout

German payments company Wirecard said it had filed for bankruptcy protection, three days after admitting to a $2.1 billion hole in its accounts.  

The move anticipated the likely cancellations of key partnerships with companies such as Visa (NYSE:), Mastercard (NYSE:) and JCB after the exposure of what appears to have been massive fraud. Former CEO Markus Braun was arrested and released on bail earlier this week.

Wirecard, once a darling of both retail and institutional investors, had joined the benchmark in 2018, forcing out Commerzbank (DE:) in a what struck many as a sign of the times. It’s the first sitting member of the DAX to file for bankruptcy.   

Another German ‘champion’, however, avoided the same fate on Wednesday as Lufthansa shareholders swung behind a 9 billion euro government-sponsored bailout.

5. Risk-aversion pushes dollar high, commodities lower

The rise in risk-aversion prompted by the fears of a new wave of lockdowns pushed the dollar higher and commodities lower.

By 6:30 AM, the , which tracks the greenback against a basket of developed-market peers, was up 0.2% at 97.34, only 0.2% away from what would be its high for the month. However, its biggest gains came as bounces from oversold levels against the safe haven yen and Swiss franc.

oil prices, by contrast, fell 1.0% to $37.61 a barrel and are down some 7.5% from the highs they hit earlier in the week on hopes that the physical crude market is rebalancing. futures fell 0.7% to hold just above the $40 a barrel mark.

, meanwhile, fell 0.4% to $1,768.50, again underlining a higher correlation to risk assets as it assumes a greater part in leveraged retail portfolios that are susceptible to short-term pressure in equities.



Top 5 Things to Know in the Market on Wednesday, June 24th By Investing.com




By Geoffrey Smith 

Investing.com — New infections of Covid-19 are running at record rates across a swath of the U.S., and markets are – belatedly, some would argue – reacting negatively. The International Monetary Fund is due to update its growth forecasts for the world later.  Stocks are set to open lower and gold is within touching distance of $1,800 an ounce for the first time in eight years, as Treasury Secretary Steven Mnuchin talks up another extension to the 2019 tax deadline. And the government will publish its weekly report on the state of U.S. oil supplies after an industry survey suggested crude stockpiles rose again last week. Here’s what you need to know in financial markets on Wednesday, June 24th.

1. Virus surge raises risk of fresh lockdowns; EU mulls ban on U.S. arrivals

The rise in new Covid-19 infections in many states across the U.S. is gathering pace, raising the risk of renewed lockdowns to bring it under control again.  Texas, Arizona and California all reported record numbers of new infections on Tuesday.

Some 29 U.S. states now have a reproduction rate (so-called R-number) of over 1, a level that ensures the virus spreads exponentially. Hospitalizations are also rising rapidly – a fact that undermines claims that rising infection rates are simply a result of broader testing.

In Europe later, ministers are expected to announce a ban on arrivals from the U.S.

The virus continues to spread rapidly across Latin America too, with Mexico also recording a record number of new infections and 793 deaths. The Honduran President Juan Orlando Hernandez, meanwhile, has been hospitalized and is receiving oxygen, according to reports.

2. Mnuchin talks up new stimulus package, tax deadline extension

U.S. Treasury Secretary said the administration is “seriously considering” another package of economic support measures and may extend again the deadline for filing 2019 tax returns.

“We want to take our time because, number one, there’s a lot of money we still haven’t put out, and, number two, we want to make sure whatever we do…is much more targeted to the businesses that are most impacted” by the virus, Bloomberg quoted Mnuchin as saying at a conference it organized.

The tax deadline has already been pushed back once from April to the end of July.

3. Stocks set to open lower; Winnebago in the spotlight 

U.S. stocks are set to open lower, as investors finally take on board the threat of the rising tide of new infections.

By 6:30 AM ET (1030 GMT), the contract was down 270 points, or 1.0%, while the was down 0.9% and the contract was down 0.6%.

Of note later will be the latest update from Winnebago Industries (NYSE:), whose stock has tripled on speculation that disruption to the travel business will spur demand for its recreational vehicles.

European stocks also turned sharply lower as fears that the U.S. could succumb to a second wave of infections outweighed a sharp rise in the German Ifo Business Climate index. The benchmark lost 1.7%.

With the exception of an isolated outbreak in the German meat-packing industry, infections have not risen noticeably in Europe since lockdown restrictions were lifted last month.

4. Gold hits 8-year high

The price of gold hit another eight-year high as the latest wave of coronavirus fears drove investors to place more bets on what is usually a haven asset.

By 6:30 AM, for delivery on the Comex exchange were up 0.7% at $1,794.80, after hitting an overnight high of $1,796.10 an ounce. Its latest rally has come at a time when other havens such as U.S. Treasury bonds have been relatively range-bound, reflecting the belief that gold is a better-value haven at a time when both nominal and real interest rates have tumbled.

Central banks around the world are still adding monetary stimulus where they can: the Bank of Japan, European Central Bank and Bank of England all increased their quantitative easing programs earlier this month against a backdrop of collapsing global growth.

The International Monetary Fund will later update its forecasts for the global economy in an update of its World Economic Outlook.

5. Crude gets the Covid-19 jitters; U.S. oil stocks eyed

oil prices caught the Covid-19 jitters, falling back below $40 on concerns that a new wave of infections will derail the current recovery in demand.

By 6:30, WTI futures were down 1.4% at $39.78, while the global benchmark was down 1.0% at $42.19.

Prices have been under pressure since the American Petroleum Institute reported a 1.7 million barrel increase in U.S. crude stocks on Tuesday afternoon. The U.S. government’s official data are due at 10:30 AM. A rise of 300,000 barrels in crude inventories is expected.

 

 



Canada denies its aluminum exports harm U.S. market, official says By Reuters




OTTAWA (Reuters) – Canada on Tuesday denied its aluminum exports harm the U.S. market and is underlining this point to its American partners, a Canadian official said on Tuesday after Bloomberg reported Washington planned to reimpose tariffs.

The possible punitive measures could be announced by Friday and be implemented by July 1, when the new U.S.-Mexico-Canada trade agreement is due to come into effect, Bloomberg reported on Monday. The Canadian and U.S. aluminum industries are highly integrated.

“We firmly believe that our aluminum exports do not harm the U.S. market. We are emphasizing this in our ongoing conversations with our American partners,” said Katherine Cuplinskas, a spokeswoman for Deputy Prime Minister Chrystia Freeland.

The American Primary Aluminum Association, which represents two of the last three remaining primary producers in the United States, last month complained that a surge in Canadian imports “is destroying what remains of the United States industry” and demanded tariffs.

The U.S. Aluminum Association, which has a much larger membership, disagrees with that position. The United States imposed tariffs on Canadian and Mexican steel and aluminum imports in 2018 but removed them last year.

“We’re taking this threat seriously. We have to regularly remind our neighbors that it is important to work together,” Jean-Yves Duclos, a minister in the Canadian government, told reporters.

“We’ve known for some time now that the United States has not only protectionist attitudes but measures.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Crude Oil Prices Rise Again as Physical Market Tightens By Investing.com



© Reuters.

By Geoffrey Smith 

Investing.com — Crude oil prices were set for a rise of over 10% this year after posting solid gains on Friday on strengthening expectations that a recovery in demand will balance the market sooner rather than later. 

By 9:15 AM ET (1315 GMT), futures were up 3.2% at $40.09 a barrel, having earlier hit an intraday high of $40.28 a barrel. The global benchmark was up 2.4% at $42.52 a barrel. 

Crude prices are now rapidly approaching the comfort level of at least some major producers. Russia’s sovereign wealth fund head Kirill Dmitriev, a key negotiator in the OPEC+ deal on output restraint, saying in an interview with Russian news site RBC that he saw no need to maintain the current deep cuts beyond their scheduled end in July. 

But the market has appeared content to push higher on the back of the OPEC+ joint monitoring committee meeting earlier this week, which stuck to the general line of keeping cuts in place while Iraq, Kazakhstan and others pledge to remedy their overproduction in May. 

The physical market continues to throw out mixed signals but analysts noted that the prices for dated Brent, that is, for near-term physical delivery, are now at their highest premium to futures contracts since before the pandemic erupted, while calendar spreads are also tightening in favor of nearer-term contracts as traders price in a faster rebound in demand. 

Many now expect the day-by-day balance of the market to swing back into deficit by next month, thanks to the OPEC+ cuts and the accompanying fall in U.S. shale production. Baker Hughes will update on the U.S. rig count later in the day, with the odds on a further fall from last week’s 199, which represented an 11-year low. 

However, the risks of another dip in demand have hardly vanished. The Chinese capital Beijing again cancelled hundreds of flights on Friday as the authorities extended their clampdown on a possible second wave of Covid-19 infections, while the rise in new cases across much of the U.S. indicates that the country hasn’t completely managed to negotiate the first wave yet. 

 Elsewhere in the energy complex on Friday, picked up 0.9% to $1.65 per mmBtu, while RBOB gasoline futures were effectively flat.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



U.S. labor market improvement stalling; second wave of layoffs seen By Reuters


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© Reuters. Thousands line up outside unemployment office in Frankfort

2/4

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing for unemployment benefits fell last week, but the pace of decline has stalled amid a second wave of layoffs as companies battle weak demand and fractured supply chains, supporting views that the economy faces a long and difficult recovery from the COVID-19 recession.

The Labor Department’s weekly jobless claims report on Thursday, the most timely data on the economy’s health, sketched a picture of a distressed labor market even though employers hired a record 2.5 million workers in May as businesses reopened after shuttering in mid-March to slow the spread of COVID-19. At least 29 million people are collecting unemployment checks.

Stubbornly high joblessness could stifle the nascent signs of economic recovery that had been flagged by a record jump in retail sales in May and a sharp rebound in permits for future home construction. Federal Reserve Chair Jerome Powell told lawmakers this week that “significant uncertainty remains about the timing and strength of the recovery.”

The economy fell into recession in February.

“The recent sightings of green shoots for economic growth are going to fade in a hurry if workers can’t return to the jobs they lost during the pandemic recession,” said Chris Rupkey, chief economist at MUFG in New York. “Over 20 million out of work without a paycheck is a lot of spending missing from the economy.”

Initial claims for state unemployment benefits fell 58,000 to a seasonally adjusted 1.508 million for the week ended June 13. Data for the prior week was revised to show 24,000 more applications received than previously reported, bringing the tally for that period to 1.566 million.

Economists polled by Reuters had forecast claims dropping to 1.3 million in the latest week. The 11th straight weekly decrease pushed claims further away from a record 6.867 million in late March. Still, claims are more than double their peak during the 2007-09 Great Recession.

Claims fell most notably in Florida and California, but rose in Texas and Washington state.

“Labor market problems have shifted away from mass closings and layoffs in immediate response to shutdown orders, and toward still-catastrophic numbers of new layoffs related to the long-term, reverberating effects of a recession,” said Andrew Stettner, senior fellow at The Century Foundation in New York.

A separate report from the Philadelphia Fed on Thursday showed labor market conditions remained depressed in June at factories in the mid-Atlantic region even as manufacturing activity in the region that covers eastern Pennsylvania, southern New Jersey and Delaware rebounded sharply.

Stocks on Wall Street were trading mostly lower. The dollar gained versus a basket of currencies. U.S. Treasury prices were higher.

MILLIONS ON UNEMPLOYMENT ROLLS

From manufacturing, retail, information technology and oil and gas production, companies have announced job cuts. State and local governments, whose budgets have been shattered by the COVID-19 fight, are also cutting jobs.

Economists expect an acceleration in layoffs when the government’s Paycheck Protection Program, part of a historic fiscal package worth nearly $3 trillion, giving businesses loans that can be partially forgiven if used for wages, runs out.

The PPP was credited for a drop in the number of people receiving benefits after an initial week of aid from a record 24.912 million in early May. But these so-called continued claims, which are reported with a one-week lag, also appear to have since stalled. The claims report showed continuing claims dropped 62,000 to 20.544 million the week ending June 6, suggesting companies were gradually recalling workers.

Initial claims covered the week during which the government surveyed establishments for the nonfarm payrolls component of June’s employment report. Economists, however, cautioned claims were no longer a good predictor of job growth.

Some believe states are still processing applications filed in the last three months after systems were overwhelmed by the unprecedented volume.

The government has expanded eligibility for unemployment benefits to include the self-employed and independent contractors who have been affected by the COVID-19 pandemic, including through lost employment, reduced hours and wages.

These workers do not qualify for the regular state unemployment insurance. They must file under the Pandemic Unemployment Assistance (PUA) program. States are also processing applications for workers who have exhausted their regular benefits under a program funded by the government.

Applications under these two programs are not included in the initial claims count. Filings for PUA increased 66,063 to 760,526 last week. About 29.2 million people were receiving unemployment benefits under all programs during the week ending May 30, the latest available data, compared to 29.5 million in the prior period.

Unemployment checks for millions will run out at the end of July, a fiscal cliff that could undercut the recovery.

“Fiscal policy will have to step up once again,” said Joel Naroff, chief economist at Naroff Economics in Holland, Pennsylvania. “Otherwise household incomes will fall sharply and much of the current rebound will fade.” 



Argentine bonds edge higher as market waits on sweetened debt offer By Reuters



© Reuters. FILE PHOTO: Argentine one hundred peso bills are displayed in this picture illustration

BUENOS AIRES (Reuters) – Argentina over-the-counter bonds edged higher on Friday as markets watched for signs of an expected sweetened offer from the government to restructure $65 billion in foreign debt.

The country’s sovereign bonds were up an average 0.6%, while the local Merval stock index rose more than 4% at open, continuing a surge as investors with an appetite for risk flock to Argentine assets despite the country’s crises.

Argentina is racing to restructure a painful debt load it says that it cannot pay, after its ninth sovereign default in May, with a moving deadline for talks on Friday. Striking a deal is key to averting a long and messy legal standoff with creditors.

“We remain pretty optimistic and price action underlines that,” said one bondholder who is not part of the main creditor committees involved in the negotiations.

“Maybe the new offer will be a modest improvement but they will want to get reasonably high acceptance to reduce the risk of litigation,” he said.

Argentine President Alberto Fernandez said on Wednesday that a deadline for the talks will likely be extended by at least 10 days and possibly more. He also reaffirmed that the country needed to strike a deal.

A government source previously told Reuters that an amended offer would likely be unveiled this week.

Argentina’s bonds, which slumped last year into distressed territory, have been higher in the last month as talks have progressed, despite a gap remaining between what Argentina is willing to pay and what key creditor groups want.

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