Potential OPEC Production Cut Amid Escalating Coronavirus
The Organization of Petroleum Exporting Countries (OPEC) met last week to discuss if the cartel should implement a temporary production cut due to the coronavirus causing hampered demand and crude oil to stock up. The OPEC Joint Technical Committee recommended the group cut an additional 600,000 barrels per day (bpd). However, Russia—the second-largest oil producer in the world—has been against the cuts. They believe the group should wait to see if the coronavirus is contained and reassess the situation at the scheduled meeting in March.
At the time this was written, West Texas Intermediate (WTI) and Brent crude oil prices have recovered slightly but remained in a bear market. WTI dropped nearly $13 per barrel or 20 percent since January 6, 2020, and Brent decreased over $14 per barrel or 21 percent over the same timeframe. Wholesale diesel prices followed suit and dropped over 33¢ per gallon or 12 percent.
Sweeping Labor Bill Would Limit Independent Contractor Use Nationwide
The U.S. House of Representatives backed a bill that would make it tougher for truckers to operate as independent contractors rather than employees. This bill mimics California’s AB5 that is currently held up in court. If it were to be passed, all workers would be classified as an employee unless they can meet a three-part test used to define if a contractor is independent or not. The worker needs to prove that they are “free from the control and direction” of the employer and that they perform a service that is “outside the usual course of the business of the employer.” The bill is expected to not move forward as the Republican-backed Senate is against the bill.
Top Energy Stories
Oil prices slid into bear-market territory on Monday, highlighting investors’ growing concern that China’s deadly coronavirus will hurt the global economy by reducing demand for gasoline, diesel and jet fuel in an already well-supplied market.
The OPEC Joint Technical Committee (JTC) met last week and recommended the group cut production by another 600,000 bpd in response to the coronavirus. Russia hesitated and asked for more time to consider deeper cuts. Moscow could make a decision in the coming days but the discord was a setback for Saudi Arabia. The continued disagreement could delay the scheduling of the ministerial meeting, which had been projected to take place this week.
The U.S. has made preliminary plans to renew a waiver allowing Iraq to import natural gas and electricity from Iran without risking sanctions, U.S. and Iraqi officials said, as Washington and Baghdad move to ease tensions after diplomatic ties nearly unraveled last month.
Top Freight Transportation Stories
Business and trucking interests are criticizing a union-backed labor bill passed by the U.S. House of Representatives. Among other things, the bill would rewrite how independent contractors are defined along the same lines as the controversial new AB5 law in California, which would upend trucking’s longstanding use of owner-operators.
Nikola Motor Company has disclosed how it will produce its forthcoming Tre model in Europe. On February 6, Italy-based CNH Industrial’s Iveco and FPT business units together with Nikola announced future Nikola Tre production will take place at an Iveco plant in Ulm, Germany.
Top Economic Stories
Uncertainty over the virus—which has infected more than 17,000 people— has disrupted worldwide trade and supply chains, depressing asset prices, and forced multinational businesses to make hard decisions with limited information.
Employers added 225,000 jobs in January and the jobless rate was 3.6%, signs that the U.S. labor market is positioned to fuel economic growth in 2020.
China said it would slash tariffs on $75 billion of U.S. imports in half as part of its efforts to implement a recently signed trade agreement with Washington.