18.03. World oil storage facilities may overflow in coming months

Energy experts fear that global oil storages may overflow during several months due to falling demand for oil because of coronavirus. Forecasts suggest a sharp drop in oil demand, as industrialized countries are isolated, and large cities are taking decisive measures in an attempt to slow the spread of the virus.

Traders such as Gunvor predict that oil demand may fall by at least 5 million bpd (5% of global demand) in April when the OPEC + agreement ends.

At the same time, the price war between Russia and Saudi Arabia will only increase the excess supply of oil on the market. It is expected that oil supplies from Saudi Arabia will grow by about a quarter, while Russia and the UAE are increasing production volumes amid a struggle for market share. In total, this may lead to a supply surplus of at least 8 million bpd.

Consulting Eurasia Group estimated that global oil demand could fall by a quarter or 25 million bpd in spring. According to analysts, the occupancy rate of onshore oil storage facilities is now 61%, and in six months they can exhaust their capacity. In this case, traders will be forced to switch to a more expensive option for storing oil – on tankers at sea.

20.03. US prepares for 18-month pandemic

The coronavirus pandemic remains the main news of the day. The disease continues to spread, adversely affecting businesses and households around the world. Over the past two weeks, about 15,000 cases of Covid-19 have been reported in the United States. Experts suggest that pandemia may drag on for a year and a half.

The House of Representatives has already received approval for a $500 billion stimulus package to tackle the pandemic. In addition, Republicans today put forward another $1 trillion aid plan in the Senate.

Under the new bill, the government will pay monthly support to all Americans during the crisis. Many low-income families in the United States have been particularly affected by the outbreak of coronavirus because they cannot go to work and therefore cannot afford to pay bills or buy medicine.

31.03. Oil will remain below $40 due to coronavirus shock and OPEC + collapse

The price of oil in 2020 will be kept below the level of $40 per barrel. This conclusion was reached by Reuters experts, having analyzed the prospects of the current situation in the world. Currently, measures to curb the global spread of coronavirus adversely affect oil demand, and the collapse of the OPEC+ contributes to an increase in the surplus of raw materials.

Analysts expect the average Brent price to be $38.76 per barrel this year. Today, Brent and WTI are trading just above $20 a barrel. Moreover, back in January, the cost of «black gold» exceeded the current price by 70%.

Pressure on the oil market is exerted by restrictions related to coronavirus and weakening demand, as well as the price war between Saudi Arabia and Russia, which caused the flood of the market with raw materials.

Experts predict that global oil demand may decline by 0.7-5.0 million barrels per day in 2020, which will be the maximum reduction since the financial crisis in 2009.

06.04. Sentix: eurozone investor sentiment drops to record low

According to Sentix analytics, investor sentiment in the eurozone fell to a record low in April, as the bloc’s economy declines in the wake of the coronavirus pandemic.

The Sentix index, which measures investor confidence in the eurozone, fell to -42.9 points in April from -17.1 points in March. Analysts predicted a decline in the indicator to -30.3 points.

Sentix Managing Director Patrick Hussey noted that the current situation is much worse than the 2009 crisis, and economic forecasts underestimate the volume of economic contraction.

In Germany, the investor sentiment index fell to -36 points from -16.9 in March, reaching the lowest level since March 2009.

Europe will need €500 billion to fight against coronavirus effects

Eurozone finance ministers held a videoconference, during which they expected to agree on the main issues of the plan to restore the economies of the region in the amount of €500 billion. The meeting and discussions lasted 16 hours, negotiations will continue tomorrow, April 9.

Eurogroup Chairman Mario Centenu noted that the negotiations have come to their logical conclusion, but an agreement on a number of issues has not yet been reached. In particular, disagreements between Italy and the Netherlands on the conditions under which loans should be provided to eurozone countries to combat the pandemic prevented progress in the negotiations.

The plan for supporting and restoring the economies of European countries will become the largest in the history of the European Union and its implementation will allow us to overcome the global crisis without losses.

The recovery program involves financing schemes to protect jobs (€ 100 billion), the European Investment Bank's business support program (€ 200 billion), and a program to support the most vulnerable states (up to € 240 billion).

10.04. EU agrees €500 billion rescue package

The finance ministers of the European Union (EU) have agreed on a plan to save the bloc’s economy in the context of the coronavirus pandemic and economic crisis worth more than 500 billion euros.

In particular, within the framework of the European Stabilization Mechanism (ESM), about 240 billion euros will be allocated to those states that have suffered the most from the coronavirus pandemic and which are members of the euro area. 200 million euros will go to lending to European enterprises with an emphasis on small and medium-sized businesses, and about 100 billion euros will go to a wage subsidy scheme so that companies do not cut their employees.

After the decision of the finance ministers, this plan should be approved at a meeting of the European Council, the highest political body of the EU.

14.04. China's GDP growth in 2020 may slow to a 44-year low

According to analysts, China's economic growth may slow to a minimum in almost half a century due to the crisis in many areas caused by the coronavirus epidemic.

In particular, the world's second largest economy can grow by only 2.5%, at the lowest rate since 1976. For example, last year, China's GDP increased by 6.1%.

Despite the fact that the Chinese government has begun to gradually ease restrictive quarantine measures, economic recovery is not expected in the coming months. Experts predict the loss of nearly 30 million jobs amid falling global demand.

In addition to the measures already taken, the People's Bank of China intends to reduce the required reserve ratio (RRR) for banks by another 100 basis points, as well as reduce the annual loan rate for first-class borrowers (loan prime rate, LPR) by 35 basis points to 3.70% by the end of 2020.

16.04. Another 5.2 million Americans file for unemployment

According to the US Department of Labor, the number of American citizens applying for unemployment benefits for the first time for the week ending April 11 was 5.245 million. The Ministry notes that Americans continue to massively apply for unemployment benefits for the fourth consecutive week.

The previous value was fixed at 6.615 million. Analysts had expected a decrease in the number of applications to 5.1 million.

Over the past month, more than 20 million applications have been filed amid the tough measures to combat the spread of coronavirus. The number of people continuing to receive unemployment benefits for the week ending April 4 increased by 4.53 million to a record 12 million.

Last month, the US economy lost 701 thousand jobs. As a result, in March unemployment jumped from 3.5% to 4.4%, peaking since August 2017. According to forecasts by Morgan Stanley, US unemployment will only continue to grow in the II quarter and will reach a record level of 15.7%.

21.04. Oil market collapses again

The situation in the oil market has again become the focus of attention of traders. For the first time in history, the price of WTI crude oil fell below zero (- $40 per barrel). This means that oil sellers are ready to pay extra to the buyer in order to get rid of crude.

Brent crude oil today collapsed to around $19 per barrel, updating multi-year lows. Pressure on quotes continues to be exerted by a catastrophic drop in demand due to the economic damage caused by the coronavirus epidemic, as well as an increase in supply.

The collapse of prices continues, despite the recently concluded new OPEC+ deal, according to which the producing countries will reduce production by 9.7 million barrels per day. As practice has shown, these measures have proved futile in the face of an oversupply in the oil market. OPEC estimates that about 14.7 million barrels per day may be unclaimed in the second quarter of the year. As a result, sales in the oil market may continue in the near future.

23.04. Eurozone business activity drops to a record low in April

Business activity in the eurozone in April reached another record low, which is a sign that the coronavirus pandemic is causing serious economic damage to the whole region.

According to preliminary data, the purchasing managers index (PMI) of IHS Markit in April fell to 13.5 points. In March, the same index already recorded the largest monthly decline to 29.7.

Chris Williamson, chief economist for business at IHS Markit, said that activity in the second quarter could record the worst recession in history. The International Monetary Fund (IMF) predicts a decline in the eurozone economy by 7.5% in 2020.

European leaders today should discuss further measures to stimulate the economy. Eurozone finance ministers have formed a €500 billion package of financial measures to deal with the economic shock caused by the pandemic, but each EU government believes that additional funding is still needed.

27.04. Gold slips amid boost risk appetite

On Monday, the price of gold began to decline amid rising risk appetite after signs that countries could soon weaken coronavirus-driven lockdowns. The spot price of gold fell to $1,720.05 per troy ounce.

However, experts predict that the fall will not last long, as market participants hope for the introduction of new incentive measures by leading central banks.

The price of palladium rose by 0.72%, to $ 2.039.68 an ounce, and platinum – by 0.27%, to $761.80 an ounce. Silver fell 0.14% to $15.22.

29.04. US GDP drops 4.8%

According to the first estimate, US GDP in the first quarter of 2020 fell by 4.8%. Analysts had expected a decrease of 4%. A negative impact on the economy was exerted by measures of social isolation in response to the coronavirus pandemic.

A key component of GDP (consumer spending) fell by 7.6%. At the same time, private gross investment continued to decline for the fourth quarter in a row, losing another 5.6%. Exports fell by almost 9% and imports by 15%.

It is worth considering that the negative impact of COVID-19 on the country's economy began in March. In this regard, experts predict an even more significant blow to the economy in the II quarter. Here, drop estimates range from 20% to 40%.