Weak Oil Demand Could Spark Another Market Share Showdown
Saudi Arabia, the world’s top oil exporter and the main force behind the OPEC+ production cuts, faces a familiar dilemma four months into the new collective agreement to curtail output in order to rebalance the market crushed by the pandemic-driven demand crash. The global oil demand recovery seems to have stalled just as OPEC+ starts to ease the production cuts by 2 million barrels per day as of August 1.
There are increased uncertainties in the oil market on both the demand and supply side. Demand recovery is not V-shaped, and it may have stalled as economies re-open in fits and starts as COVID-19 cases return to grow in many countries. Global oil supply is also subject to speculation, as OPEC+ and North American producers restore part of the previously curtailed production.
Unsurprisingly, virus and freight downturn ate into largest carriers’ revenues and profits in 2020’s first half
Several of the country’s largest for-hire motor carriers saw their revenues and profits tumble in the first half of 2020 compared to the same time period a year ago, as the COVID-19 pandemic and corresponding shutdown orders ate into freight volumes and trucking rates.
However, several carriers mentioned that freight volumes improved steadily into July. Of those, several also said they were anticipating a crimp in trucking capacity in the back half of the year, which would stand to boost rates as the supply chain adjusts to ongoing shockwaves.
Top Energy Stories
Fieldwood Energy LLC, an oil driller that operates in the Gulf of Mexico, is preparing to file for bankruptcy within days as it grapples with the prolonged slump in commodity prices exacerbated by the coronavirus pandemic, according to people familiar with the matter.
Oil prices were down early on Friday as demand concerns persist, but prices were on track for a weekly gain after hitting a five-month high as the U.S. dollar weakened and U.S. crude oil inventories fell.
Saudi Aramco, the world’s largest oil company, said on Sunday that its quarterly earnings plunged more than 73 percent compared to a year ago, as lockdowns imposed to curb the coronavirus pandemic drastically cut the demand for oil and slammed prices.
Top Freight Transportation Stories
Shipping companies are diverting vessels from the heavily damaged Beirut port following the massive explosion that began in a waterfront warehouse and killed more than 100 people while devastating Lebanon’s main trading gateway.
US logistics managers are increasingly willing to abandon paper documents such as less-than-truckload bills of lading and delivery receipts for digital transactions, as supply chain disruption caused by the COVID-19 pandemic heightens the need for shipment data and touch-free deliveries, according to technology providers and LTL carriers.
Container capacity growth at ports from channel-deepening projects to cargo terminal construction is expected to shrink at least 40% over the next five years as port operators reconsider expansion amid the pandemic-driven slump in global trade.
Cummins Inc. recently received two awards from the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy for nearly $7 million. The awards are for Cummins’ continued work on fuel cell powertrain solutions for heavy-duty applications for on-highway tractor-trailers and buses.
Just two months after becoming a publicly-traded company, Nikola Corp. reported that net losses widened versus year-ago levels as the company continues investing in the buildup toward the introduction of its electric trucks.
Top Economic Stories
Filings for jobless benefits fell to their lowest level since the coronavirus hit the U.S. in March—a sign layoffs eased somewhat in a still struggling labor market—but remained at historically high levels for the 20th straight week.
U.S. retail foot traffic is slackening and growth in the number of shifts worked by hourly employees has ground to a halt, a clutch of high-frequency data showed this week, offering the latest evidence the economic recovery that appeared so promising two months ago is rapidly losing momentum.
U.S. stock indexes traded lower early Friday after the July employment report showed the economy added back slightly more jobs than expected, but at a slower pace than in previous months with the American recovery hamstrung by rising coronavirus cases in many states.