Oil, shares slip on doubts over Saudi-Russia deal

Oil, shares slip on doubts over Saudi-Russia dealOil prices retreated on Friday after massive gains, while stocks in Asia edged down, as doubts grew over an oil price deal between Saudi Arabia and Russia that U.S. President Donald Trump said he had brokered. With the coronavirus pandemic raising the risk of a prolonged global downturn, investors continued to seek the safety of the U.S. dollar and government bonds, pushing U.S. Treasuries yield near their lowest in three weeks. U.S. West Texas Intermediate (WTI) crude lost $1.14, or 4.5% to $24.18 a barrel in early Asian trade after having surged a record 24.7% on Thursday.

Oil’s Trump Bump Fades as Doubts Rise Over Proposed Output Deal

Oil’s Trump Bump Fades as Doubts Rise Over Proposed Output Deal(Bloomberg) -- Oil slid back below $25 a barrel after a record surge as doubts crept in about a deal touted on Twitter by U.S. President Donald Trump that would see deep supply cuts from producers including Saudi Arabia and Russia.Futures dropped as much as 7.1% after surging almost 25% in New York on Thursday following Trump’s tweet that he expected global producers to slash output by 10 million barrels or more. However, the Kremlin later said that President Vladimir Putin had not spoken to his Saudi counterpart and hasn’t agreed to reduce production. Citigroup Inc. and Goldman Sachs Group Inc. said any supply deal would be too little, too late as demand craters.See also: Trump’s Push for Huge Deal to Cut Oil Supply Draws DisbeliefWhile futures spiked, the outlook for the physical market remains bleak as discounts for some grades of physically delivered oil across the U.S. and Canada widened. Heavy Louisiana Sweet crude lost $1.75 a barrel relative to West Texas Intermediate to a record $10.50 discount.Oil has whipsawed this week after plunging to an 18-year low on Monday. While Trump tweeted that he had spoken to Saudi Crown Prince Mohammed bin Salman, who had in turn spoken with Russian president, a person familiar with the situation said the U.S. president’s goal is purely aspirational and will ultimately hinge on whether Riyadh and Moscow can reach a deal.After Trump’s request, Saudi Arabia said it had called a meeting of the OPEC+ alliance that includes Russia to discuss a “fair agreement,” signaling it would only cut output if others do so. Producers are facing an unprecedented collapse in demand as nations try to stem the spreading coronavirus.“Even if there is an agreement to curtail 10 million barrels a day of output, the fundamentals show demand destruction and inventory builds,” said John Driscoll, chief strategist for JTD Energy Services Pte in Singapore. The “anxiety and mayhem out there is reminiscent of the financial crisis,” he added.West Texas Intermediate for May delivery fell $1.26, or 5%, to $24.06 a barrel on the New York Mercantile Exchange as of 1:53 p.m. Singapore time. The contract is still up about 12% this week, set for the first weekly gain since February. Brent for June settlement lost 4.9% to $28.48 on London’s ICE Futures Europe exchange. Prices are up 14% this week.Texas Railroad Commission Ryan Sitton, in a rare move for the state’s oil regulator, tweeted on Thursday that he spoke with Russian Energy Minister Alexander Novak and discussed a 10-million barrel a day global output cut and would talk to the Saudi oil minister soon. Trump is scheduled to meet with U.S. oil company executives Friday as the administration seeks ways to help the beleaguered industry.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

Boeing Sees Thousands of Workers Exiting Amid Travel Market Rout

Boeing Sees Thousands of Workers Exiting Amid Travel Market Rout(Bloomberg) -- Boeing Co. expects several thousand workers to retire or accept a buyout offer as the planemaker races to shrink its operations amid a historic unraveling of global travel from the coronavirus pandemic, said a person familiar with the company’s plans.The manufacturer will start by offering the exit package in the U.S., while selectively hiring for critical programs such as defense and space, said the person, who asked not to be named because the discussions are confidential. Boeing is also weighing a production cut for wide-body jets as demand falls, although no changes have been made as yet, the person said.Chief Executive Officer Dave Calhoun is walking a fine line by downsizing at a time when Boeing is considering whether to tap billions of dollars in federal aid to bolster cash reserves. Layoffs would give the planemaker more control over how it lowers the cost of its 161,000-strong workforce, but at the risk of stirring up a backlash from its critics in Washington.“They need to cut costs with payroll, but they need to maximize leverage with headcount,” aviation consultant Richard Aboulafia said of the tug-of-war between Boeing’s cost-cutting news and its political interests. “My biggest concern is that when you have an announcement like this, it’s often the experienced engineers and designers who leave.”$60 Billion BailoutVoluntary buyouts keep the government-assistance option viable, should Calhoun ultimately choose to pursue it. He has blanched at the potential strings attached as Congress seeks to limit job cuts in industries it helps. But the company has told Congress that the aerospace industry needs some $60 billion.What’s not clear to anyone is the depth and duration of the slump. Calhoun warned that the company faced a “new reality” of a strikingly different jetliner market that will require a years-long recovery when the world emerges from the pandemic. Lingering in the air is whether the current belt-tightening measures will be enough.“They will bridge us to recovery as long as we’re not confronted with more unexpected challenges,” he wrote to employees. “I can’t predict with certainty what the next few months will bring, but I can commit to being honest about what’s happening and doing everything we can to protect our people and our business through this crisis.”Boeing sank 5.7% to $123.27 at the close of trading in New York, on a day when most stocks rose. The shares have tumbled 62% this year, the biggest drop on the Dow Jones Industrial Average.Parked JetsThe cost cuts will preserve much-needed cash at Boeing as airlines around the world slash schedules and park aircraft. About 44% of planes are in storage, according to data provider Cirium. And with global virus cases exceeding 1 million, there’s no telling when carriers will return to normal schedules, much less start buying jets again from Boeing and its European rival, Airbus SE.Of the market shocks this century from the 9/11 terrorist attacks to the 2008 financial market meltdown, “This one is worse in a way because it is so sudden, so deep and so broad,” said Robert Spingarn, an analyst with Credit Suisse Group AG. “I can’t think of a time historically where traffic has virtually stopped overnight and there is no refuge.”Even if the global economy pulls off a swift v-shaped rebound after the crisis, any return from the 70% plunge in airline capacity wouldn’t be immediate, he cautioned. A slower u-shaped recovery would heighten the pain.“You’re going to have some reluctance to travel simply because people have gone through a tremendous scare here,” Spingarn said. “If we get into a u-shaped situation and have depressed traffic, I think there’s just multiples of the impact.”Wide-Body RiskBoeing is facing a particularly acute risk to its twin-aisle jets like the 787 Dreamliner and the coming 777X, as long-distance travel has been hit harder than shorter hops. Production of wide-body jets could tumble by 60% over the next three years, Jefferies analyst Sheila Kahyaoglu wrote in a March 31 report.With “extraordinary headwinds” buffeting Boeing’s airline customers, “it may mean deferring airplane deliveries or other forms of assistance,” Stan Deal, who heads the company’s jetliner division, told employees.Executives will no doubt continue to evaluate whether deeper, involuntary layoffs will be needed, said Jeff Windau, an analyst with Edward Jones. But in recent weeks, “things have been changing constantly, so that almost every minute, you’re getting a different data point, a different view,” he said.“That’s part of the huge challenge here,” for Calhoun and Boeing, Windau said. “They’re trying to scope out what’s the right level of workforce-to-demand over the next several months, and that’s a moving target.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

U.S. Futures Slip; Crude Oil Pares Thursday Surge: Markets Wrap

U.S. Futures Slip; Crude Oil Pares Thursday Surge: Markets Wrap(Bloomberg) -- Asian stocks looked set for a mixed session as U.S. futures retreated. Crude oil pared a surge seen Thursday after President Donald Trump said Russia and Saudi Arabia would cut production.Australian shares traded higher with futures indicating gains in Japan and losses in Hong Kong. The S&P 500 closed up 2.3% with energy shares the best performers, while consumer discretionary stocks lagged after jobless claims doubled from last week to 6.6 million. Treasuries retreated Thursday amid a slew of corporate supply. West Texas crude slipped back below $25 a barrel after surging 22% on Thursday -- an advance that pared as officials from both sides watered down expectations. The yen and euro slipped.With the coronavirus now having infected 1 million people and lockdowns for many economies around the world expected to go on for longer, economic data are showing the severity of the impact. Nearly 10 million people in the U.S. have lost their jobs in the past two weeks, more than were lost during the whole 2008-09 recession.“We are not going to have the real recovery in the market until what we think is the peak in the amount of infections and deaths,” Stephen Dover, head of equities at Franklin Templeton, said on Bloomberg TV. “We are going to continue to have very wide volatility until we can get over this uncertainty.”These are the main moves in markets:StocksFutures on the S&P 500 fell 0.5% as of 8:49 a.m. in Tokyo. The gauge rose 2.3% on Thursday.Futures on Japan’s Nikkei 225 advanced 0.3%.Hang Seng futures earlier slid 0.7%.Australia’s S&P/ASX 200 Index rose 1.2%.CurrenciesThe yen fell 0.1% to 107.98 per dollar.The offshore yuan held at 7.0932 per dollar.The euro fell 0.1% to $1.0844.BondsThe yield on 10-year Treasuries rose two basis points to 0.60% Thursday.Australia’s 10-year yield gained four basis points to 0.81%.CommoditiesWest Texas crude fell 2.3% to $24.73 a barrel after surging 22% Thursday.Gold was flat at $1,612 an ounce.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

Shuffled Not Shaken Out: How Hotel Giants Will Handle All Those Brands Post-Coronavirus

Shuffled Not Shaken Out: How Hotel Giants Will Handle All Those Brands Post-CoronavirusCoronavirus travel fears have temporarily shuttered many hotels around the world. But when those doors reopen, the trend of rampant hotel brand expansion seen in recent years may take on a different look. With the rise of alternative accommodation competitors like Airbnb, hotel companies began to add brands that appealed to different price points as […]

Trump says he brokered deal with Saudi, Russia for huge oil cuts

Trump says he brokered deal with Saudi, Russia for huge oil cutsU.S President Donald Trump said on Thursday he had brokered a deal with top oil producers Russia and Saudi Arabia to cut output and arrest an oil price rout amid a global coronavirus pandemic, sending crude prices up by 45%. Trump said he spoke with Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman, and now expected the two nations to cut output by 10 million barrels per day (bpd) - an unprecedented number representing 10% of global supply. Trump said cuts could amount to as much as 15 million bpd but didn't say whether the United States, the world's largest oil producer, would contribute to reductions, a move which is forbidden by U.S. antitrust legislation.

China to Start Buying Oil for State Reserves After Crash

China to Start Buying Oil for State Reserves After Crash(Bloomberg) -- China is moving forward with plans to buy up oil for its emergency reserves after an epic price crash, according to people with knowledge of the matter.The world’s biggest importer is taking advantage of a 60% plunge this year to snatch up cheaper barrels for its stockpiles, a source of considerable speculation in the oil market because of the government’s reluctance to release information about their formation, size or use.Beijing has asked government agencies to quickly coordinate filling tanks, the people said, asking not to be identified because the matter is confidential. In addition to state-owned reserves, it may use commercial space for storage as well, while also encouraging companies to fill their own tanks, they said.The initial target is to hold government stockpiles equivalent to 90 days of net imports, which could eventually be expanded to as much as 180 days when including commercial reserves.Ninety days of net crude imports is about 900 million barrels, according to data compiled by Bloomberg. While the current size of China’s state reserves is unknown, and Beijing could use a different method for calculating net imports, oil traders and analysts estimated it could amount to China buying an additional 80 million to 100 million barrels over the course of the year.While the purchases could help soak up some excess supply, traders said it will fall well short of offsetting the overall glut created by the virus lockdowns and the price war between Saudi Arabia and Russia.Brent crude, the international benchmark, rose as much as 13% to $27.88 a barrel on Thursday. Oil also got a boost from comments by President Donald Trump that he expected Saudi Arabia and Russia to work out their differences.Emergency ReservesThe volume targeted is about the same as the Trump administration proposed buying last month for U.S. reserves to help that country’s drillers. The plan was thwarted after Democrats blocked a request for funds.China is also planning to announce the fourth batch of strategic reserve sites, the people said. The expansion project has the dual advantage of creating larger emergency reserves and as an economic stimulus project to spur construction opportunities as the country recovers from the coronavirus.Officials at the National Development and Reform Commission, the top economic planner, didn’t immediately respond to requests for comment.Before the government’s directive was made public, consultancies SIA Energy and Wood Mackenzie Ltd. both estimated that China could probably add 80 million to 100 million barrels to reserves this year before it ran into logistical and operational constraints.According to SIA, China had about 996 million barrels of oil combined in strategic and commercial storage as of March 31. Another research firm, Orbital Insight, pegged the figure at about 928 million barrels on April 1.In September, the head of development and planning at the National Energy Administration said the country had total oil reserves, including strategic stockpiles, for about 80 days. In December, state-owned China National Petroleum Corp. said on its website that the government intends to boost the capacity of its strategic petroleum reserves to 503 million barrels by the end of this year, an indicator of the maximum amount the government can store.The U.S. currently holds about 635 million barrels in its Strategic Petroleum Reserve, according to government data.(Updates with price jump in 7th paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

U.S. Futures Rise; Oil Surges on China Stockpiling: Markets Wrap

U.S. Futures Rise; Oil Surges on China Stockpiling: Markets Wrap(Bloomberg) -- U.S. equity futures rose with European stocks on Thursday as investors braced for the latest unemployment data from the world’s biggest economy. Oil surged after China unveiled plans to boost its reserves.Contracts on the main U.S. equity benchmarks all climbed following steep losses for the underlying gauges a day earlier, though traders will be wary of further evidence of how the spreading coronavirus is hitting the American job market. The Stoxx Europe 600 Index fluctuated before turning higher, with energy shares outperforming. Brent crude futures jumped as much as 13% as the world’s biggest importer took advantage of a 60% plunge this year to add to stockpiles.Stocks in Asia were mixed, with losses in Japan and Australia and gains in South Korea and China. Treasuries edged lower and the dollar was little changed.After enduring their worst quarter since 2008, stocks are struggling for traction as companies move to slash dividends and more U.S. states enact severe restrictions on movement to curb the coronavirus pandemic across the world’s biggest economy. Fatalities rose in France and Spain, while Italy and Germany took steps to extend lockdown measures and Florida ordered people home. New York and New Jersey said deaths have doubled in the last three days.“The incremental news on the virus in the last 24 to 48 hours has been disappointing,” John Porter, a fund manager at Mellon Investments Corp., said on Bloomberg TV. “The global economy has hit a wall, there’s a tremendous amount of uncertainty, and that’s contributing to the volatility in the markets and the downward trajectory we’ve seen the last few days.”Elsewhere, the pound pushed higher while gold fluctuated.These are the main moves in markets:StocksFutures on the S&P 500 Index increased 1.5% as of 7:17 a.m. New York time.The Stoxx Europe 600 Index climbed 0.4%.The MSCI Asia Pacific Index fell 0.3%.CurrenciesThe Bloomberg Dollar Spot Index was little changed.The euro dipped 0.4% to $1.0919.The British pound gained 0.5% to $1.2436.The Japanese yen decreased 0.2% to 107.37 per dollar.BondsThe yield on 10-year Treasuries increased one basis point to 0.60%.Germany’s 10-year yield gained three basis points to -0.43%.Britain’s 10-year yield fell less than one basis point to 0.311%.CommoditiesGold climbed 0.1% to $1,593.70 an ounce.West Texas Intermediate crude increased 9.5% to $22.23 a barrel.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.