Archives of “April 8, 2020” day

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US weekly EIA oil inventories +15177K vs +9250K expected

  
Analysis, Crude

Weekly petroleum inventories

  • Prior week was 13833K
  • Gasoline +10497K vs +5550K exp
  • Distillates +476K vs +1500K
  • Refinery utilization -6.7% vs -2.15% exp
  • Cushing +6417K
  • Production 12.4 mbpd vs 13.0 mbpd prior
That’s a lot of oil going into storage in two weeks and Saudi cargoes are just starting to land.
API numbers from late yesterday:

  • Crude: +11,938K
  • Gasoline: +9445K
  • Distillates: -177K

London mayor says that UK is nowhere near lifting lockdown measures

  
  Analysis

Comments by London mayor, Sadiq Khan

  • UK is probably still a week-and-a-half away from virus peak
As mentioned earlier in the week, the next step for governments is to manage expectations surrounding the virus outbreak and easing of lockdown measures.
A flattening in the curve and change in the virus trajectory is good and will get people anxious to want to leave their homes and return back to normalcy, but if the restrictions are lifted too soon then there is going to be the risk of a secondary outbreak.
I wouldn’t take to heart his timing on the virus peak. The virus spread will play itself out over time as lockdown measures are in place, and the government response has to match that – not the other way around.

German leading institutes see economy shrinking by almost 10% in Q2 2020

  
  Analysis

Estimates from five of Germany’s leading research institutes

Germany
  • Q1 GDP likely shrank by 1.9%
  • Q2 GDP estimated to contract by 9.8%
  • On the year, German economy likely to shrink by 4.2%
  • But government measures should fuel an expansion of 5.8% in 2021
The estimated 9.8% drop in economic activity for Q2 would be the most on record – in terms of quarterly data – with there being “considerable downside risks” to the projections still.
Among those risks are a slower-than-expected weakening in the spread of the virus and problems reviving the economy after the shutdown eases or a secondary outbreak.
I would say that one should just take these forecasts with a pinch of salt for now. We all know things are going to be bad in April everywhere around the world and conditions will continue to be more subdued in May and June as well.
But the hard part will be trying to quantify the changes in social behaviour after all this is said and done with once lockdown measures are slowly lifted over time.

India to stock up on strategic oil reserves to take advantage of low prices – report

  
Analysis, Crude

Bloomberg reports, citing officials with knowledge of the matter

  • India is set to snap up millions of barrels of Middle East crude
  • The purchases are in line with global efforts to stabilise energy markets
  • This comes after Indian oil minister spoke to US, Saudi counterparts
The sources also say that the finance ministry has already approved the request and that India is seeking to buy around 5.5 million barrels from the UAE and about 9.2 million barrels from Saudi Arabia, with some additional purchases from Iraq.
The report notes that India has space for an additional 15 million barrels of crude currently. For some context, India is the world’s third biggest oil consumer – after the US and China.
Oil isn’t really moving on the report as prices are still up by just over 3% on the day at around $24.40 now. That is closer to the lows for the day though, after a fall from around $25.20 at the start of the European morning.

S&P cut Australia to AAA negative

  
  Analysis
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S&P cut Australia outlook to negative from stable

Rating is AAA still.
This is not wholly unexpected from S&P
AUD down a few pips on the announcement
S&P cite:
  • reflects substantial deterioration of Australia’s fiscal headroom
More:
  • large Australian budget deficits likely to be temporary
  • virus a severe economic c and fiscal shock
  • government deficit to average 7.5% of GDP in 20/21
  • annual growth to fall to 1.3% in FY 2020

Will China lower its GDP target, or even scrap it altogether?

  
Analysis, Economy

Comments late in March from People’s Bank of China adviser Ma Jun expressed wariness of setting a target:

  • setting GDP target may force China to resort to flood-like stimulus
  • GDP growth between 4 to 5% will be difficult to achieve for China

Bloomberg have a follow-up piece

  • The coronavirus shock has influential Chinese economists and officials engaging in a previously unimaginable debate: should Beijing drastically reduce its economic growth target or even abandon it altogether?

The GDP target is usually set at the annual parliament meeting in March, which was delayed due to coronavirus.

A date for the National People’s Congress has still not been set, allowing for specuatliotn that perhaps there will be no GDP target this year.
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