Oil rallies 10% after Trump says he expects Saudi Arabia-Russia feud to end soon

Oil prices rallied on Thursday after President Donald Trump talked up the possibility of Saudi Arabia and Russia ending a squabble that contributed to crude’s massive plunge since last month.

West Texas Intermediate futures surged by $2.11, or 10.4%, to $22.42 per barrel. International benchmark Brent jumped 10.4%, or $2.58, to $27.32 per barrel.

“Worldwide, the oil industry has been ravaged,” Trump told reporters in a news conference Wednesday evening. “It’s very bad for Russia, it’s very bad for Saudi Arabia. I mean, it’s very bad for both. I think they’re going to make a deal.”


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Trump added he expects both countries to end their price war within a “few days.” Trump made his remarks ahead of a meeting with energy industry executives scheduled for Friday.

“Who has the biggest problem? Saudi, and Russia. Saudi above all,” Paul Sankey, an analyst at Mizuho, said in a note to clients. “Their burn rate in this market will use up their $500bn reserve pile within two years.”

OPEC countries led by Saudi Arabia proposed last month a production cut of 1.5 million barrels per day as demand waned. However, non-OPEC producer Russia rejected the cut, sparking a price war between the two nations that has tanked the value of crude.

On March 6, U.S. crude was trading above $41 per barrel. Since then, crude has lost about half of its value.


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“Saudi Arabia is fulfilling its pledge of raising oil exports following the collapse of the OPEC+ agreement with Russia,” said Neil Beveridge of AB Bernstein, in a note. “We expect unprecedented levels of stock builds in 2Q20 which could test the limits of both onshore and floating crude capacity.”

Crude also got a boost Thursday after Bloomberg News reported —citing people with knowledge of the matter — that China will start buying oil for its emergency reserves.

Source: cnbc.com | Original Link

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Stock futures jump ahead of big jobless claims report as oil rebounds 10%

U.S. stock futures jumped after a surge in the price of oil, a financial market which has collapsed this year and raised concerns about hefty losses for the energy industry.

A big jobless claims report ahead at 8:30 am ET would likely determine the direction of the market on Thursday.

Dow futures were up 415 points, implying a 349-point rise at the open. The S&P 500 and Nasdaq Composite were also set to open higher.


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Economists expect another 4 million to 5 million workers filed for jobless claims last week as coronavirus-related shutdowns roll through the country. The estimates range as high as 9 million.

But WTI crude jumped 10% to back above $22 a barrel on Thursday after President Donald Trump said he expects Saudi Arabia and Russia to come to an agreement about their price war that has added to the pain for the crude market, already getting hit by an unprecedented demand slowdown from the coronavirus.

Traders have been closely watching oil because of its influence over other financial markets. The oil losses have been so big, that they have caused investors to sell other assets to cover their losses in crude. Plus, the 63% decline in oil this year is hurting the U.S. shale industry, a big driver of the economy and employment.

Energy stocks were among the biggest gainers in premarket trading. Shares of Exxon Mobil and Chevron each gained more than 6%. Occidental Petroleum and Apache jumped more than 10%.

Stocks posted steep losses on Wednesday to begin the second quarter, as the coronavirus outbreak continues to wreak havoc on global markets.

The Dow Jones Industrial Average closed 4.4%, or 973.65 points, lower at 20,943.51. The S&P 500 and Nasdaq Composite also closed 4.4% lower, at 2,470.50 and 7,360.58, respectively. Stock losses accelerated minutes before the close, although the major averages did manage to end the session off the lows of the day. The Dow briefly fell more than 1,100 points.

The utilities, real estate, and financial sectors dragged the S&P 500 lower, while Boeing and American Express were the Dow’s biggest underperformers, falling 12% and 9%, respectively.

New York Gov. Andrew Cuomo said Wednesday he is closing all New York City playgrounds and said that the state’s model projects a high death rate through July. He also said cases in New York state now total more than 83,000.

Cuomo’s comments came after President Donald Trump said Tuesday evening that the U.S. should prepare for a “very, very painful two weeks.” White House officials are projecting between 100,000 and 240,000 virus deaths in the U.S.

The coronavirus outbreak, which sent global markets tumbling in the first quarter, continues to act as a headwind for the market as investors grapple with the ongoing uncertainty around how long the economy will be closed.

“While April will be an extremely volatile month in terms of both the news flow and stock market reactions, I do think many are anticipating this,” Bleakley Advisory Group chief investment officer Peter Boockvar said Wednesday. “What is not priced in I believe because it’s obviously hugely unknown is what is on the other end come May. How contained will this virus spread be by then? To what extent will things begin to reopen, if at all?”


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On Tuesday, the Dow and S&P 500 closed out their worst first-quarter performances of all time. The Dow fell more than 23% in the first quarter; that was also its biggest quarterly fall since 1987. The S&P 500 fell 20% in the first quarter, its biggest quarterly loss since 2008.

“While we have not seen announcements yet, dividend cuts could be on the horizon for U.S. companies,” said New York Life Investments multi-asset portfolio strategist Lauren Goodwin.

“With a heavy hit to revenues, businesses may opt to prioritize employees and lower borrowing loads over paying dividends. This could present a risk for equities. Announcements of temporary (1-2 quarters) of dividend cuts could be priced in, but longer cuts would likely contribute to negative sentiment,” she added.

Amid the market rout, Congress passed a massive $2 trillion stimulus package in an effort to halt the economic slowdown caused by the pandemic. Already, there are calls for even more stimulus.

Boston Federal Reserve President Eric Rosengren said Wednesday that Congress likely will have to deliver more stimulus to help those at the lower end of the economic spectrum and to boost small business.

Unemployment is likely to “rise pretty dramatically over the next couple of months” and the economic damage won’t abate until the coronavirus is brought under control, he said. “I don’t think we’ll turn a corner until people feel comfortable taking mass transit again,” he said.

Source: cnbc.com | Original Link

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Dow set to fall 700 points at the open after market posts worst first quarter on record

U.S. stock futures dropped early Wednesday morning and pointed to sizable declines at the open, following the end of the worst first quarter on record for the Dow and S&P 500 spurred by the coronavirus sell-off.

At around 4:50 a.m. ET, Dow Jones Industrial Average futures fell 703 points, indicating an opening loss of about 741 points. S&P 500 futures and Nasdaq-100 futures also pointed to losses at the open.

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President Donald Trump said Tuesday evening the U.S. should prepare for a “very, very painful two weeks” from the rampant coronavirus. White House officials are projecting between 100,000 and 240,000 virus deaths in the U.S.

“This is going to be a rough two-week period,” Trump said at a White House press conference. “When you look at night the kind of death that has been caused by this invisible enemy, it’s incredible.”

On Tuesday, the Dow fell 410 points or 1.8% to 21,917.16, weighed down by American Express, which dropped more than 5%. The S&P 500 fell 1.6% to 2,584.59 and Nasdaq Composite dropped nearly 1% to 7,700.10. At its session high, the Dow was up more than 150 points.

The Dow secured its worst first-quarter performance ever, losing more than 23% of its value in the first three months of 2020. The 30-stock benchmark had its worst quarter since 1987. The S&P 500 fell 20% in the first quarter, its worst first quarter ever and its biggest quarterly loss since 2008. The Nasdaq fell more than 14% in the first quarter.

DoubleLine Capital CEO Jeffrey Gundlach said that the coronavirus driven market rout will worsen again in April, taking out the March low.

“The low we hit in the middle of March … I would bet that low will get taken out,” Gundlach said in an investor webcast on Tuesday. “The market has really made it back to a resistance zone. … Take out the low of march and then we’ll get a more enduring low.”

The coronavirus pandemic has caused a nationwide shutdown of the economy, halting business production and leaving millions of American workers unemployed. The unprecedented societal disruption has caused financial distress and volatility never seen before, ultimately causing the wort first quarter in history for both the Dow and the S&P 500.

“The quarter will be remembered as the fastest and greatest drop in the stock Market for the start of any post-war bear market,” said Jim Paulsen, chief investment strategist at the Leuthold Group. “This reflects the fact that this Bear is the only one cause by a recession which was simply ‘proclaimed’ as leaders announced they were essential shutting down the economy. Since a recession was ensured, the Bear skipped all its normal foreplay and simply went right to the end fully reflecting a recession almost immediately.”


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U.S. oil experienced its worst month and quarter in history, losing more than 66% of its value in the first three months of the year. Demand has evaporated due to the coronavirus outbreak and a price war between Saudi Arabia and Russia.

Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, told CNN that he is starting to see “glimmers” that social distancing is helping to lessen the spread of the coronavirus. Meanwhile, U.S. cases of the fast-spreading virus have topped 177,000, according to Johns Hopkins University. The death roll from the virus in America has surpassed 3,400.

Wall Street also posted sharp losses for the month. The Dow and S&P 500 fell 13.7% and 12.5%, respectively, in March for their worst one-month declines since the 2008 financial crisis.

However, stocks have managed to rally towards the end of month. Investors are hoping the market has bottomed, with many strategists expecting a “V” shaped recovery, a sharp drop in GDP in the second quarter and a swift snapback in the third quarter. The so-called bond king Gundlach called those estimates “highly, highly optimistic.”


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On Wednesday, private payroll data is expected to show an evaporation in job creation. Moody’s ADP Employment data for March will be released, with economists expecting a fall of 125,000 jobs, compared to April’s addition of 183,000 non-government jobs. Markit Manufacturing PMI and ISM manufacturing index for March will also be released on Wednesday.

Source: cnbc.com | Original Link

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