Oil Prices Climb as Traders Brace for Wild Ride to Continue
While crude oil prices have gained back ground over the past two sessions, oil is now trading at a fraction of where it started the year. Despite prices jumping up on Thursday, oil remains well below levels that make it profitable for companies to produce. Some analysts are skeptical that the large percentage rebound from the past few days will persist, noting that such big gains tend to cluster around long-term declines. Traders are bracing for more gyrations in the coming weeks.
Prices regained lost ground last week as China showed signs of a recovery in demand for oil, as people begin to emerge from coronavirus lockdowns. In addition, prices also received a boost as the U.S. and Iran engaged in a new round of antagonism on Wednesday. Early in the day, President Trump threatened to destroy Iranian boats that harass the U.S. Navy, which put upward pressure on oil prices. Traders remain very sensitive to tensions in the region that could disrupt movement of oil through the Strait of Hormuz—a vital shipping channel for tankers.
ATRI Study Shows a Spike in Truck Activity Followed by a Decline
On April 22, the American Transportation Research Institute (ATRI) released research showing the impact COVID-19 has had on the trucking industry. The analysis examined activity from Feb. 9 through April 18 across California, Florida, Illinois, New York, Pennsylvania, and Washington. Although trucking activity spiked across six states during the coronavirus pandemic’s early days, the study indicates that such freight activity has declined.
The data shows that trucking operations declined in April, reflecting the dozens of statewide stay-at-home orders that shut down sectors of the economy. ATRI Senior Vice President Dan Murray said the economy has declined in part because there is little demand for goods other than critical items, such as food.
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Not all oil companies are equal when it comes to the pain of sharply lower crude prices. Some companies and national producers around the world bought insurance—in the form of hedging strategies—for just such a collapse.
Crude prices rose Wednesday, pausing a weekslong crash after President Trump warned Iran that he has instructed the U.S. Navy to destroy Iranian gunboats if they continue to harass American ships in the Persian Gulf.
The collapse in global crude prices, led by the US, is a “body blow” for the North Sea industry, and government help will be needed to protect the sector, industry group Oil & Gas UK’s chief executive Deirdre Michie has said.
A plan being weighed by Treasury Secretary Steven Mnuchin to steer financial aid to beleaguered oil drillers could set up a clash with Democrats who have warned against any bailout for the industry.
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Global truck manufacturers Daimler Truck AG and Volvo Group have reached a preliminary agreement on a joint venture to develop, produce and commercialize fuel cell systems in heavy-duty vehicles by the second half of the decade.
There are thousands of small trucking companies that move the vast majority of the goods in U.S. freight markets. With light cash flow, limited reserves, and uncertain access to credit, many of those carriers now are struggling under an upheaval in shipping markets created by lockdowns on economic activity meant to control the coronavirus pandemic.
Brent Higgins Trucking, based in Mulberry, Arkansas, is a regional operation hauling fresh and refrigerated products. As a part of the food manufacturing and distribution supply chain, its business has not been hit hard by the economic shutdown caused by the COVID-19 pandemic. In fact, the first effect, like many other refrigerated fleets, was being offered more business than they could handle.
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The manufacturing industry is calling on Congress to provide more financial incentives for manufacturers that switch to the production of essential goods, including personal protective equipment (PPE). “The nation is not prepared for the near-constant demand for personal protective equipment that will come from all industries as states prepare to reopen their economies,” the industry group said.
About 4.4 million Americans applied for jobless benefits in the week ended April 18, the Labor Department said Thursday. Jobless claims, which are laid-off workers’ applications for unemployment-insurance payments, had reached 5.2 million a week earlier. Since the pandemic led to widespread shutdowns in mid-March, workers have filed more than 26 million unemployment insurance claims.
The House approved a nearly $500 billion coronavirus rescue package that delivers emergency aid to small businesses and hospitals after two weeks of negotiations between party leaders and the White House.
Another wave of states prepared to ease coronavirus restrictions on U.S. commerce this week, despite health experts warning there is still too little diagnostic testing, while the White House forecast a staggering jump in the nation’s monthly jobless rate.