Positive Demand Hopes Extend the Oil Price Rebound | Weekly News Update

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Positive Demand Hopes Extend the Oil Price Rebound

Oil prices have extended their recent recovery, as hopes for a bounce in fuel consumption with economies hard hit by COVID-19 slowly reopen for business. The recent gains have paused a weekslong crash that was mainly driven by worries about North America’s main hub for oil storage running out of space.

Oil prices are now receiving a boost on two fronts. Demand for products such as gasoline and diesel are seeing upward pressure as parts of the U.S. and Europe relax restrictions on movement and the Chinese economy recovers. At the same time, the production of crude oil has dropped.

There are other signs that the oil market may be turning a corner. The gap between spot prices for U.S. crude, compared with the price of futures contracts, has narrowed after a dramatic widening in April. That has reduced financial incentives for traders to put oil into storage.


Trucking demand craters, rates follow

Trucking companies saw less demand in April as factories shut down and stay-at-home orders led to a drop in consumer demand, outside of grocery and other essential items. As fewer shippers look to move goods, trucking companies will struggle. But the shippers left on the market could benefit from lower spot rates as a result.

A supply and demand balance in the freight market is expected to swing in favor of shippers in the short term, but then swing back to carriers heading into 2021, according to Tim Denoyer an ACT Research Senior Analyst.


Top Energy Stories

WSJ: Oil Majors Delay Deals Amid Volatile Crude Prices, Lockdowns

Before Covid-19 and the oil-price rout, most of the world’s biggest energy companies had planned to sell billions in assets to help pay down debt and maintain dividends. Now, those divestment programs are in jeopardy.

WSJ: Oil’s ‘Relief Rally’ Stalls After Prices Double

Energy producers are throttling back their output, drivers are returning to the road and U.S. oil prices are roughly twice what they were a week ago, raising hopes—but not confidence—that the mounting fuel glut won’t overwhelm the world’s capacity to store oil.

ARGUS: US crude stocks rise by 4.6mn bl: Update

US crude stocks rose by 4.6mn bl last week, a smaller-than-expected increase, as storage inventories at the key Cushing, Oklahoma, hub climbed for a ninth consecutive week.

TRANSTOPICS: Oil Slips With Glut Concerns, Reversing Saudi Price Hike Boost

Oil fell in a day of wild price swings as investors weighed supply-and-demand fundamentals against Saudi Arabia’s global price hike.

WSJ: Americans Are Pumping Gas Again as States Reopen

Fuel makers including Valero Energy Corp. VLO 5.35% and Phillips 66 have said they expect gasoline demand to continue to rebound after plunging to roughly half of normal levels in early April, as states reopen from lockdowns imposed to limit the spread of the new coronavirus.


Top Freight Transportation Stories

SCDIVE: Rail carriers cut capacity as intermodal volume drops 17% in April, the largest fall since 2009

The coronavirus pandemic is affecting multiple components of rail volume. Reduced imports at west coast ports mean fewer intermodal containers moving via rail to the middle of the country, and shuttered auto plants mean major customers aren’t moving freight.

WSJ: Heavy-Duty Truck Orders Plunge to Record Low

Orders for heavy-duty trucks in April plunged to the lowest level on record as trucking companies put expansion plans on ice due to upheaval from the coronavirus pandemic.

CCJ: Fleets making plans to emerge stronger from coronavirus

With many states rolling back workplace restrictions that limited person-to-person contact, motor carriers now find themselves in a position to inventory the changes they have made during the coronavirus pandemic and choose which ones will be permanent.

CCJ: Trucking shed 88,000 jobs in April as U.S. unemployment soared under coronavirus outbreak

Total employment in the for-hire trucking industry tumbled by 88,000 jobs in April, according to the Department of Labor’s monthly Employment Situation Summary. That significant dip, nearly 6% of the entire trucking workforce, was part of the broader economy’s shedding of 20.5 million jobs in the month as the economic freeze under the coronavirus outbreak and corresponding shelter-in-place orders from states spurred a wave of temporary and permanent job losses.


Top Economic Stories

BLOOMBERG: Hundreds of Earnings Calls Show Companies More Scared Than 2008

The once-in-a-century pandemic has unleashed financing fears all over Corporate America that far exceed the 2008 crisis, as executives’ prep for fresh economic and market pain.

AP: More than 20 million jobs vanished in April

U.S. businesses cut an unprecedented 20.2 million jobs in April, an epic collapse with coronavirus outbreak closing the offices, factories, schools, construction sites, and stores that propel the U.S. economy.

REUTERS: Stocks climb, shaking off U.S. jobs data, thanks to China trade relief

World shares rose on Thursday after Chinese exports proved far stronger than expected, suggesting recovery was underway, but the dollar fell from two-week highs as another report showed millions of more Americans were unemployed.


This weekly publication is designed to highlight relevant industry news to provide professionals in the transportation, supply chain, and energy sectors with up-to-date information in a rapidly changing marketplace. This update is purely a compilation of industry news and as such, does not necessarily reflect the opinion of Breakthrough. We do not warrant or guarantee accuracy or completeness of information. For additional information, please contact us at info@breakthroughfuel.com.

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