Despite Stimulus Efforts Oil Posted Fifth Straight Weekly Loss
Despite best efforts by policymakers around the world, on Friday oil prices experienced a loss of 5 percent. This was the fifth straight weekly loss for oil prices as demand continues to be decimated by the coronavirus pandemic. Brent crude settled at $24.93 a barrel while U.S. crude—West Texas Intermediate (WTI)—settled at $21.51 a barrel, falling more than 3 percent during the week.
According to the International Energy Agency (IEA), with 3 billion people in lockdown, global oil demand could be cut by a fifth. Fatih Birol, the head of IEA called on major producers such a Saudi Arabia to help stabilize oil markets. However, those calls may not be enough to bring balance back into the market. As oil demand continues to plummet, Saudi Arabia is struggling to find customers for their extra oil, this undermines its bid to seize market share by expanding production.
Last year, the U.S. Energy Information Administration—EIA—determined global oil demand to be around 100 million barrels per day for 2019. Oil and gas research group JBC Energy said it had “drastically” reduced its oil demand forecast for 2020, expecting a decline of more than 7.4 million barrels per day on average from the prior year.
Trucking Networks Upended by Coronavirus
The trucking industry is being hit hard by the coronavirus pandemic as retailers continue to deliver food and household staples. This difficulty is being compounded as other businesses have shut down due to lockdowns aimed at curbing the spread of COVID-19. This, in turn, has left many rigs empty on trips returning home.
Some truckers have also requested to avoid areas that have shelter-in-place orders, “based on a lack of confidence in finding outbound freight”. This has helped prop up prices on the spot market for carriers as shippers’ book last-minute transportation. The average price per mile for a big rig has risen a full 12 percent since March 1, according to online freight marketplace DAT Solutions LLC.
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Rather than compelling the Trump administration to relax its oil sanctions regime, the global coronavirus pandemic and oil price crash may be motivating an even more aggressive US oil sanctions policy, particularly in stopping petroleum flows out of Venezuela and Iran, analysts said this week.
There has been no letting up in the oil price war despite the intense demand destruction caused by the global Covid-19 pandemic that has now reached Europe and the United States. There have been rumblings about the United States getting involved in the war, pleading with Saudi Arabia to reassure the market that it will not flood it with oil. So far, all indications are that those requests are falling on deaf ears, with Riyadh set, as of April 1, to flood the market. Russia has positioned itself to ramp up production, too, but to a lesser extent.
The U.S. has cut its latest waiver allowing Iraq to import Iranian gas and electricity to 30 days, dialing up pressure on the government in Baghdad to cut back its ties to Iran as low oil prices push it to the brink of an economic crisis.
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TuSimple, an autonomous trucking technology company, and ZF, a global supplier of multiple trucking components and technologies, expect to co-develop production-quality technologies including cameras, LiDAR, radar, steering, and ZF’s automotive-grade central computer ZF ProAI.
CEVA Logistics has become the latest global forwarder to declare force majeure on all its ocean, air, and land contracts, invoking the measure just days after DHL Global Forwarding took the same step to cope with unforeseen impacts of the coronavirus disease 2019 (COVID-19).
Container ship operators that canceled more than half their sailings to China, as coronavirus-driven restrictions froze work at its ports last month, are bracing for a second wave of disruption.
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The Senate approved the largest economic stimulus package in recent memory, moving the estimated $2 trillion bill to the House as Congress seeks to give American families and businesses a financial shield against the ravages of the new coronavirus pandemic.
A record 3.28 million workers applied for unemployment benefits last week as the new coronavirus hit the U.S. economy, marking the end of a decade long job expansion.