On Friday, U.S. President Donald Trump receives the heads of the leading US Oil companies, to discuss the unprecedented crisis in the industry. The collapse of the price of the raw material has led in recent months to a dramatic fall in the share price in many stocks from the sector, which accounts for only 2.6 percent of the index weight in the S&P500 and the lowest weight among all the sectors on the scale.
Yesterday, Trump had caused something of a relief in the Oil sector, after he made a Tweet for a record increase in the price of Oil. Nevertheless, the price for the US variety WTI is almost 60 percent below the level of the end of 2019. Trump had tweeted that he had spoken with the Saudi crown Prince Mohammed bin Salman (MbS), which have in turn spoken with Russian President Vladimir Putin.
“I expect and hope that they (Saudi Arabia and Russia) the production of almost 10 million barrels, and possibly significantly more thrushes, which, if the should happen – great for the Oil and gas industry,” tweeted Trump. He later spoke of up to 15 million barrels.
the Oil industry is in an unprecedented crisis
The global Oil industry is under severe pressure. As global demand slumped due to the Corona pandemic by almost 20 percent to around 80 million barrels per day. Commodities trader Trafigura is expected for April, even a collapse of more than 30 million barrels per day. Because of the measures taken to combat the pandemic, such as output restrictions, was like the U.S. gasoline demand last to 6.7 million barrels per day, which is the lowest level since January 1994. With Stock Selection in Europe, you will achieve excess Returns with System! (Partner offer) Now 30 days free of charge test!
A hope for a possible soon recovery of the economy and thus the demand for the energy carriers, there is not absolute, especially in the United States. So had doubled the initial applications for US unemployment aid last week, from 3.3 million to 6.6 million. The latter figure amounts to around ten times the previous negative records. In order to have made in just two short weeks, 10 million Americans have an initial application for unemployment assistance. db Oil price WTI 27,51 USD +3,46 (+14,39%) OTC
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The Congressional Budget Office (CBO), so, the financial Committee of Congress, predicts that the economic output will slump in the second quarter by more than seven percent compared to the previous quarter. According to the usual calculation method in the USA, the Minus amounted to more than 28 percent annualized. The annualized value is calculated by multiplying the percentage change over the previous quarter, with four. In addition, the CBO predicts a massive rise in the unemployment rate to more than ten percent for the second quarter in advance – that would be a devastating environment for the Oil industry.
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Russia denies
For additional pressure on the price of Oil, the price war between Saudi Arabia and Russia, provides. So Saudi Arabia, the funding increases at the beginning of April to more than 12 million barrels per day, compared to 9.7 million barrels for March. A collapse in global demand and a simultaneous strong increase in the supply from Saudi Arabia, had caused the collapse in the Oil price.
However, the Kremlin denied the Tweet right after Trumps, that it gave it a conversation between Putin and MbS. “There was no conversation,” said Kremlin spokesman Dmitry Peskov. Moreover, Saudi Arabia Trumps, described the statements as an “Exaggeration”. However, the country has invited to the Meeting for next Monday to a virtual “OPEC+” -, a “fair agreement” should be sought.
agreement seems very unlikely
This means that Saudi Arabia is only under the condition of a reduction in production if, in addition to the “OPEC+”-countries, especially Russia, other major producing countries such as the USA, Canada and Brazil, their funding would be cut. According to the media, Arabia, reports Saudi-in this case, ready to throttle the own promotion to under 9 million barrels per day.
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Even if Russia would agree to a reduction of its production of around 11.5 million barrels per day, 0.5 million barrels – which had been rejected by Russia last, would amount to the reductions of the two countries to a total of only 3.5 million barrels. So you would be away, but miles and miles of 10 to 15 million barrels. Moreover, since neither Russia nor other countries of a reduction are likely to agree to, should it not want to come in on Monday no agreement can be reached, especially as Trump, according to media reports, the U.S.-to urge the Oil industry to a throttling.
oil price slump in the US economy, heavily burdened
in order to avoid the impression that Trump has once more widespread Fake News with the only purpose to manipulate the price of Oil. In the process, Trump had asked earlier repeatedly the Saudis, the production of vigorously expand, in order to provide for substantially lower prices. Trump’s statement: as a result, the Americans could consume more money in your pocket, so you more, which would stimulate the economy.
Obviously, Trump has become clear, however, that the slump in the Oil price impacted not only the industry but the entire U.S. economy, because the Oil companies reduce their investments drastically. “This underscores our Thesis that the damage to the US Oil industry outweighs the Benefit to the consumer,” wrote Eugen Weinberg, Analyst at Commerzbank.
That exactly is, had given to the Trump, most recently, in an Interview to Fox News. “I never thought I would ever say that we need an increase in the price of Oil, but that’s what we need,” said Trump.
The strong recovery in the price of Oil is likely to be only of very short duration. Since it is very unlikely that it comes on the next Monday to an agreement between Saudi Arabia and the other major producing countries are likely to be investors on the global slump in demand because of the Corona pandemic focus. Then the price of Oil should noise back down. Tips from Beate Sander: “I lay now in a Crash the Foundation for the next Million” FOCUS Online tips from Beate Sander: “I lay now in a Crash the Foundation for the next Million”
