China’s ‘nervous’ Xi risks new Cold War, last Hong Kong governor says By Reuters



© Reuters. FILE PHOTO: Former Hong Kong governor Chris Patten attends an interview in Hong Kong

LONDON (Reuters) – Chinese President Xi Jinping is so nervous about the position of the Communist Party that he is risking a new Cold War and imperiling Hong Kong’s position as Asia’s preeminent financial hub, the last British governor of the territory told Reuters.

Chris Patten said Xi’s ‘thuggish’ crackdown in Hong Kong could trigger an outflow of capital and people from the city which funnels the bulk of foreign direct investment into mainland China.

“What does it mean? It means serious question marks not just about Hong Kong’s future as a free society but also about Hong Kong’s ability to continue as probably the premier international financial hub in Asia,” Patten said in an interview.

“A lot of people will try to leave Hong Kong,” Patten said, adding that he feared capital would also flow out of the territory which Britain handed back to China in 1997.

The West, he said, should stop being naive about Xi.

“We have long since passed the stage where, without wanting another Cold War, we have to react to the fact Xi seems to want one himself, seems to want to be able to bully his way to whatever he thinks China wants,” Patten said.

Patten, now 76, watched as the British flag was lowered over Hong Kong when the colony was handed back to China in 1997 after more than 150 years of British rule – imposed after Britain defeated China in the First Opium War.

Hong Kong’s autonomy was guaranteed under the “one country, two systems” agreement enshrined in the 1984 Sino-British Joint (NASDAQ:) Declaration signed by then Chinese Premier Zhao Ziyang and British Prime Minister Margaret Thatcher.

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Dollar surges on worries that U.S.-China trade war will resume By Reuters


© Reuters. FILE PHOTO: Four thousand U.S. dollars are counted out by a banker at a bank in Westminster

By Olga Cotaga

LONDON (Reuters) – The U.S. dollar surged against most major currencies on Monday amid fears that last year’s U.S.-China dispute will be re-ignited, this time over the novel coronavirus.

U.S. President Donald Trump and Secretary of State Mike Pompeo have pinned the blame for the pandemic on China, where the new coronavirus outbreak is believed to have originated.

The latest salvo came from Pompeo on Sunday, who said there was “a significant amount of evidence” that the virus emerged from a laboratory in the central Chinese city of Wuhan.

“This morning’s session is being dominated by risk-averse trading as investors weigh the negative consequences to global growth from another escalation in U.S.-China tensions,” said Simon Harvey, currency analyst at broker Monex Europe.

“The headlines of further tariffs and supply-chain disruptions come at a time where global growth expectations are already fragile, causing currencies such as sterling and the euro to trade on the back foot this morning despite exit measures set to be announced or implemented in their respective economies,” Harvey said.

The euro was last down 0.4% at $1.0932 (). Sterling was also down by 0.4% to $1.2442 .

The dollar was also rising against Scandinavian currencies, which are so vulnerable to global trade risks. The Swedish crown was last down 0.6% at 9.8995 versus the dollar and the Norwegian crown was falling by 0.8% at 10.3975 .

However, the biggest move in the currency markets was the Chinese yuan, which fell to a six-week low of 7.1555 against the dollar in the offshore market . It was last flat at 7.1380, but if falls again, the next levels to watch would be the mid-March low of 7.1651 and early-September low of 7.1975.

Analysts were debating how the United States might attack China again – with more trade tariffs or even cancelling the payments on the U.S. Treasurys that China owns – but they all agreed the dollar/yuan cross would see higher volatility.

“A re-escalation in U.S.-China trade tensions has the potential to bring an end to the relative stability in ,” said Lee Hardman, a forex strategist at MUFG.

The moves extended a dour start for May, which began with Friday’s bleak U.S. data and the threat of a fresh trade-war between the world’s two biggest economies.

Pompeo did not provide evidence, or dispute a U.S. intelligence conclusion that the virus was not man-made. But the comments double down on Washington’s pressure on China as U.S. deaths and economic damage mount.

The ultimate safe-haven currency – the Japanese yen – was the only major currency that rose against the U.S. dollar, last trading up 0.2% at 106.71 .

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.





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Gold Edges Higher as Trump Revives Trade War Concerns By Investing.com


© Reuters.

By Geoffrey Smith 

Investing.com – Gold prices traded higher on Monday as a revival of trade tensions between the U.S. and China cast a chill over risk assets, forcing a second straight-day of losses in equities.  

By 11:35 AM ET (1535 GMT), for delivery on the Comex exchange were up 0.7% at $1,725.20 an ounce, albeit without any sign of retesting the highs of the last month.

was up 0.3% at $1,706.18 an ounce.

were more affected by the declines in risk assets, but bounced off support around the $14.80 level to trade at $14.88 an ounce, still down 0.4% from Friday’s close. were up 0.5% at $777.75 an ounce.

The moves happened largely in response to remarks over the weekend from President Donald Trump, who told Fox News that sanctions could be “the ultimate punishment” for its role in the spread of the coronavirus. He also threatened to rip up the Phase 1 trade deal of last year if China fails to buy the promised volumes of U.S. goods.

Other haven assets remained well bid, with Treasury yields flat near recent lows and ultra-safe German 10-year yields hitting their lowest in over six weeks before rebounding to -0.56%, up two basis points on the day.

Eurozone sovereign debt has traded choppily ahead of a ruling on Tuesday by the German Constitutional Court on the legality of the European Central Bank’s asset purchase programs. While most analysts expect the court to accept the European Court of Justice’s ruling in 2018 that the purchases are allowable, some analysts have noted that the ECB’s drastic expansion of QE has raised the risk that it will be more confrontational, maybe even forcing the Deutsche Bundesbank to pull out of a program that is a key part of Europe’s pandemic policy response.

Elsewhere on a thin day for economic data, eurozone purchasing manager indices were revised slightly lower but added nothing to the shock value of the preliminary readings. U.S. factory goods orders, down just over 10% in March, also failed to shock a market that is more focused on U.S. labor market data toward the end of the week.

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.



Shell cuts dividend for first time since World War Two By Reuters


© Reuters. FILE PHOTO: A Shell logo is seen reflected in a car’s side mirror at a petrol station in west London

By Ron Bousso and Shadia Nasralla

LONDON (Reuters) – Royal Dutch Shell (LON:) cut its dividend for the first time since World War Two on Thursday as the energy company retrenched in the face of an unprecedented drop in oil demand due to the coronavirus pandemic.

Shell also suspended the next tranche of its share buyback programme and said it was reducing oil and gas output by nearly a quarter after its net profit almost halved in the first three months of 2020.

Shell’s shares in London dropped 6.7% in early trading on Thursday, underperforming rival BP (L:).

“Given the risk of a prolonged period of economic uncertainty, weaker commodity prices, higher volatility and uncertain demand outlook, the Board believes that maintaining the current level of shareholder distributions is not prudent,” Shell Chairman Chad Holliday said.

For years, Shell has taken pride in having never cut its dividend since the 1940s, resisting such a move even during the deep downturns of the 1980s.

Shell is the first of the five so-called Oil Majors to cut its dividend because of the fallout from the coronavirus crisis. BP and Exxon Mobil (N:) have said they will maintain their first quarter dividends while Total (PA:) and Chevron (N:) have yet to report first-quarter results.

Shell said it would reduce its quarterly dividend to 16 cents per share from 47 cents for the last three months of 2019.

Graphic – Shell dividends: https://fingfx.thomsonreuters.com/gfx/ce/ygdpzywmnvw/Shell%20dividends.png

The dividend cut also comes after Shell this month laid out the oil and gas sector’s most extensive strategy yet to reduce greenhouse gas emissions to net zero by 2050.

“The 66% dividend cut is a necessary evil to reinforce Shell’s capital frame and position it for the offence on the energy transition,” JP Morgan analyst Christyan Malek said.

Shell paid about $15 billion in dividends last year making it the world’s biggest payer of dividends after Saudi Arabia’s national oil company Saudi Aramco (SE:).

Graphic – Shell’s upstream production: https://fingfx.thomsonreuters.com/gfx/ce/dgkplgxlxvb/Pasted%20image%201588230160594.png

Graphic – Shell’s profits: https://fingfx.thomsonreuters.com/gfx/ce/yzdpxorxxvx/Pasted%20image%201588230264111.png

OUTPUT CUTS

Following years of deep cost cuts after its acquisition of BG Group for $53 billion in 2016, Shell had previously planned to boost payouts to investors through dividends and share buybacks to $125 billion between 2021 and 2025.

Outside the Oil Majors, Norway’s Equinor (OL:) became the first large oil company to cut its dividend in response to the current downturn, reducing its first-quarter payout last week by two-thirds.

Global energy demand could slump by 6% in 2020 due to coronavirus lockdowns and travel restrictions in what would be the largest contraction in absolute terms on record, the International Energy Agency (IEA) said on Thursday.

Shell last month said it would reduce capital expenditure this year to $20 billion at most from a planned level of about $25 billion and also cut an additional $3 billion to $4 billion off operating costs over the next 12 months.

Its first-quarter net income attributable to shareholders based on a current cost of supplies and excluding identified items, fell 46% from a year earlier to $2.9 billion, above the consensus in an analyst survey provided by Shell.

Shell’s fourth-quarter net income was also $2.9 billion.

The company said it cut activity at its refining business by up to 40% in response to the demand shock.

Shell said it expected to cut production of oil and gas in the second quarter to between 1.75 million and 2.25 million barrels of oil equivalent per day (boed) from 2.7 million boed in the first quarter.

Shell’s gearing, or its debt-to-capital ratio, inched down to 28.9% in the first quarter from 29.3% in the fourth quarter, but was up from 26.5% in the same period a year earlier.



Tesla expands locally made line-up, blunting trade war impact By Reuters


© Reuters. FILE PHOTO: A Tesla logo is seen at a groundbreaking ceremony of Tesla Shanghai Gigafactory in Shanghai

BEIJING (Reuters) – U.S. electric vehicle maker Tesla Inc (O:) said on Friday it has started China sales of two more Model 3 variants built at its Shanghai plant, meaning all Model 3 sedans sold in the country are now locally made and not subject to import tax.

The development comes at the tail end of a Sino-U.S. trade war characterised by tit-for-tat tariffs on goods and services as varied as metals and cars, which bumped up prices of U.S. made goods in China.

It also comes after Tesla suspended production at its San Francisco Bay Area plant due to the broader impact of the coronavirus, with plans to resume normal operation on May 4.

Tesla said it aims to start delivering Shanghai-made Long Range Model 3 cars from June this year, priced 339,050 yuan after subsidies.

The rear-wheel drive variant, with a driving range of over 600 kilometres before needing to be recharged, differs from the imported version which was all-wheel drive and priced 439,900 yuan.

The locally made Performance Model 3, for which deliveries are slated for the first quarter next year, will be priced 419,800 yuan, the California-based automaker said without specifying the price after subsidies. Imported Performance Model 3 vehicles were priced 509,900 yuan.

The move contrasts with a previous plan from Tesla’s billionaire chief executive, Elon Musk, under which the automaker would only make more affordable versions of the Model 3 sedan at its $2 billion Shanghai factory.

Tesla sold 10,160 vehicles in China in March, versus 3,900 in February, marking its highest-ever monthly sales in the world’s largest auto market, industry data showed.

Tesla also said it will cut the pay of global vice presidents in China by 30% and that of China-based director-level executives by 20%, to be consistent with operations in the United States. Salaries of other China-based staff are unchanged, it 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.



Mexican president calls on Russia, Saudi Arabia to end oil price war By Reuters


© Reuters. Mexico’s President Andres Manuel Lopez Obrador speaks during a news conference at National Palace in Mexico City

MEXICO CITY (Reuters) – Mexican President Andres Manuel Lopez Obrador on Saturday called on Russia and Saudi Arabia to reach a deal soon and end their oil price war to avoid deepening the oil price crisis.

Mexico and others have seen the prices for their crude exports battered in recent weeks after the fallout from the new coronavirus eroded demand and major oil producers could not agree on how to respond.

“How can Russia and Saudi Arabia not come to an agreement in order to stop oil price declines that are further deepening the crisis?” Lopez Obrador asked. “Where is the responsibility toward humanity? Where is the universal brotherhood? Where are the so-called heads of state?”

Mexican Energy Minister Rocio Nahle had told Reuters on Friday that oil prices would not stay this low, and that the oil price crash did not merit a change in strategy.

Even so, Mexican national oil company Petroleos Mexicanos, or Pemex [PEMX.UL], slid deeper into “junk” territory after Fitch Ratings cut the rating of its bonds by another notch to BB with a negative outlook.

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. Republican lawmaker urges State Department to boost diplomacy on oil price war By Reuters


© Reuters. FILE PHOTO: The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County

WASHINGTON (Reuters) – A top Republican lawmaker urged a U.S. State Department official on Wednesday to press ahead with diplomatic efforts to end the oil price war between Saudi Arabia and Russia that is harming U.S. oil producers.

Representative Michael McCaul applauded Secretary of State Mike Pompeo’s emphasis, in a call with Saudi Arabia’s Crown Prince Mohammed bin Salman, on the need for stability in global oil markets.

“I urge you to continue diplomatic engagement to help stem the devastating economic implications of the ongoing price war between Saudi Arabia and Russia,” McCaul said in the letter to Keith Krach, the undersecretary of state for economic growth, energy and the environment.

“We cannot… allow our industries to become the victim of someone else’s price war, so I ask you to continue utilizing every tool at your disposal to press Saudi Arabia and Russia to cut production.”

The price war and a demand drop related to the coronavirus pandemic have about halved U.S. oil prices, below $25 a barrel on Wednesday. [O/R]

McCaul, the top Republican on the U.S. House Committee on Foreign Affairs, represents Texas, one of the top U.S. oil producing states.

It was not clear exactly what the Trump administration can do to push Saudi Arabia or Russia to boost oil output. Wars over market share can sometimes last months.

Daniel Yergin, vice chairman of IHS Markit, and an energy historian, said the price war may require collaboration in a broad framework such as the G20, which Saudi Arabia is chairing this year.

“That would permit a discussion going beyond the present Russia-Saudi impasse, bringing in the United States and a larger group of producers and consumers, including Brazil, China, France,” and others, Yergin wrote in an opinion piece in the Washington Post this week.

McCaul’s letter was the latest effort by Republican lawmakers to push the administration to find an end to the price war. Earlier this month 10 Republican senators, mostly from energy producing states, urged Trump to impose an embargo on oil from Russia and Saudi Arabia.

The U.S. Energy Department will soon send Victoria Coates, who recently handled Middle East issues on the White House national security council, to Riyadh as a special energy envoy to work on stabilizing energy markets.

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 posts biggest weekly losses since 2008, hit by coronavirus and Saudi price war By Reuters


© Reuters. FILE PHOTO: Pump jacks operate in front of a drilling rig in an oil field in Midland

By Stephanie Kelly

NEW YORK (Reuters) – Oil prices on Friday posted their biggest week of losses since the 2008 global financial crisis, rocked by the coronavirus outbreak and efforts by top exporter Saudi Arabia and its allies to flood the market with record levels of supply.

The rare combination of severe shocks to both supply and demand has caused the crude market to collapse as producers around the world steel themselves for an unexpected glut of oil in coming weeks.

“It’s a problem of an oil price war in the middle of a constricting market when the walls are closing in,” U.S. energy historian Daniel Yergin said.

The coronavirus sparked panic selling across markets for the bulk of the week. The virus has infected at least 138,000 people worldwide and killed more than 5,000, disrupting business, markets and daily life. [MKTS/GLOB]

Major oil producers were pumping more crude into the market as demand collapses. Saudi Arabia has chartered more than 30 crude supertankers to export oil in coming weeks, specifically targeting big refiners of Russian oil in Europe and Asia, in an escalation of its fight with Moscow for market share.

Goldman Sachs (NYSE:) said it now expected a record oil surplus of six million barrels per day (bpd) by April, in a global market that usually consumes about 100 million bpd.

On Friday, prices were higher, rebounding after the United States and other nations signalled plans to support weakening economies. But Brent crude () dropped 25% on the week, the biggest weekly fall since the 2008 global financial crisis. On Friday, Brent rose 63 cents to settle at $33.85 a barrel.

U.S. West Texas Intermediate (WTI) crude () futures fell about 23% on the week, their biggest percentage decline since 2008. WTI rose 23 cents to settle at $31.73 a barrel, after earlier gaining to $33.87 a gallon.

Hopes for a U.S. stimulus package that could ease an economic shock from the coronavirus provided some support to the oil and stock markets on Friday.

“There’s hope that all the stimulus will stabilize the economy and offset some of the concerns about weaker demand and keep parts of the economy strong enough to support oil prices,” said Phil Flynn, analyst at Price Futures Group in Chicago.

Saudi Arabia, the world’s largest exporter, and the United Arab Emirates offered more oil to customers after OPEC’s talks with Russia and others on supply restraint collapsed last week.

Russia, the world’s second-largest producer, has shown no interest in agreeing to further output curbs with the Organization of the Petroleum Exporting Countries.

Russian oil producers met Energy Minister Alexander Novak on Thursday but did not discuss a return to the deal. The head of Gazprom (MCX:) Neft said it planned to hike production in April, following the talks.

(Graphic: GRAPHIC: Analysts cut oil price forecasts for 2020 – https://fingfx.thomsonreuters.com/gfx/editorcharts/GLOBAL-OIL-POLL/0H001R8GCCBP/eikon.png)

A Reuters survey showed analysts slashed their forecasts of Brent crude prices to $42 a barrel on average in 2020, compared with the $60.63 consensus in a February poll.

But the price slump may reduce some supply, by forcing out more costly producers.

Energy companies in the United States, which has surged to become the world’s biggest crude producer because of a boom in pricier shale oil, are preparing to cut investment and drilling plans due to plunging prices.

The U.S. oil drilling rig count rose for a second week in a row despite a massive drop in both oil and prices this week and expectations from many analysts that the number of rigs will fall as producers deepen spending cuts.

Companies added one oil rig in the week to March 13, bringing the total count to 683, their highest since December, energy services firm Baker Hughes Co (N:) said on Friday.

(GRAPHIC: North American oil producers slash spending – https://fingfx.thomsonreuters.com/gfx/editorcharts/GLOBAL-OIL-SHALE/0H001R8G6CB7/eikon.png)



Oil Heads for Worst Week Since 2008 as Price War Grips Market By Bloomberg



(Bloomberg) — Oil is headed for its largest weekly collapse since 2008 as a bitter price war erupted between Saudi Arabia and Russia, and coronavirus contagion cratered demand.

Futures in New York are down 18% this week. The crude surplus may reach a record high by April as the two former OPEC+ allies race to increase production, according to Goldman Sachs Group Inc (NYSE:). The market’s structure has already returned to a super-contango, indicating a big oversupply.

At the same time, concerns over demand are continuing to grow. prices fell by a fifth on Thursday as President Donald Trump issued a travel ban from Europe.

recovered some of this week’s losses on Friday, with equities paring Thursday’s slump. Still, signs of fear abounded, with oil more volatile than during the financial crisis.

The schism between Moscow and Riyadh is hardening with Russian oil producers planning to ramp up production next month, and no plans for a detente with Saudi Arabia. The kingdom said earlier in the week that it would boost output by more than 25% in April, while it sends a flood of crude to Europe, Russia’s tradition market.

“Demand is falling, refining margins are weakening, Saudi crude oil exports are surging: the super-contango is back,” Petromatrix Managing Director Olivier Jakob wrote in a report. “It will be difficult for Saudi Arabia to regain control of the markets.”

Governments and central banks have so far been powerless to stem the coronavirus-driven rout that’s reverberating through financial markets and threatening a global recession. Trump has yet to offer a detailed economic rescue package, while the European Central Bank left interest rates unchanged, although it took steps to boost liquidity.

In the U.S., several independent oil companies have already announced plans to scale back operations amid the flood of cheap crude. The American industry is also encouraging the Trump administration to waive a law that mandates only domestic vessels can be used to transport goods between U.S. ports.

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.



Chevron shows off war chest by pledging up to $80 billion in returns


NEW YORK (Reuters) – Chevron Corp (CVX.N) on Tuesday said it would keep its spending in check and return up to $80 billion to shareholders over the next five years, with Chief Executive Mike Wirth making the case that his company is the oil major best able to produce oil and generate profits at the lowest cost.

FILE PHOTO: The logo of Chevron Corp is seen in its booth at Gastech, the world’s biggest expo for the gas industry, in Chiba, Japan April 4, 2017. REUTERS/Toru Hanai/File Photo

The number two U.S. oil producer laid out its plan to weather what is turning into one of the most challenging markets in years, as coronavirus concerns dent short-term demand and environmental and investor pressures cloud the longer-term outlook for the industry.

Chevron will stick to the previously announced capital spending plan of $19 billion to $22 billion annually through 2024, setting it apart from chief U.S. rival Exxon Mobil, which is spending heavily to boost production.

The spending plan is “a positive and affirming their capital-disciplined philosophy,” said Jennifer Rowland, analyst at Edward Jones.

Oil prices are down 20% this year and natural gas prices have fallen to their lowest since the 1990s. Industry returns have lagged the broader market for a decade, souring investors.

Chevron could distribute as much as $80 billion in cash to shareholders over the next five years, Wirth said in a meeting with analysts and investors in New York, adding that the “number one priority is returning cash to shareholders.

While the emergence of coronavirus – which emerged in China late last year and has spread to more than 60 countries – has depressed demand for its products, Wirth said “supply chains are functioning normally.”

He laid out a long term case for growing global demand for oil and gas.

“The world will need more of what we produce, not less,” Wirth said.

But the company has based its plans on a $60 international oil price, about $7 lower than current prices, and is working toward “increased growth in a world which looks to not need it,” analysts at Tudor, Pickering, Holt & Co. said.

The top U.S. shale field will continue to drive Chevron’s oil growth, and the company expects “sustained production over 1 million barrels per day in the Permian through 2040 at relatively flat activity levels,” said Jay Johnson, executive vice president. Chevron reached 514,000 barrels per day of output in the field at the end of 2019, up 36% in a year.

Reporting by Jennifer Hiller in New York and Shariq Khan and Arathy S. Nair in Bengaluru; Editing by Anil D’Silva, Nick Zieminski and Chizu Nomiyama



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