Unemployment Will Remain Elevated Throughout 2020
June 16th, 2020
Genscape reported that crude oil stocks held in Cushing, Ok in the week ending Friday, June 5th fell by 1,016,752 barrels.
Dallas Federal Reserve President, Robert Kaplan, said the US economy will experience a “significant, historic” contraction in the second quarter before it starts to increase, and unemployment will remain elevated at the end of 2020. He projects that GDP will fall by an annualized rate of 35% to 40% in the second quarter and that it should start to recover in the second half of the year. He said the economy may recover more quickly if consumers and businesses take precautions to limit the spread of the coronavirus.
White House chief economic advisor Larry Kudlow said the increase in cases would not send the country into a second shut down. It appears the administration is willing to accept the health consequences of unleashing the US economy again.
BP said it will write off up to $17.5 billion from the value of its assets after cutting its long-term oil and gas prices forecast. It believes that the impact of the coronavirus on demand for crude oil will be more permanent and more rapidly accelerate the shift away from fossil fuels.
Energy research reports from Evercore ISI and Rystad Energy said North American exploration and production spending is declining by 42% in 2020 to 15-year lows that return the industry investments back to the pre-shale era. Global upstream spending is down nearly 30% this year, with spending in North America down more than 50%.
Price rallied after the market was down early in the day on the back of news that the Federal Government looks to continue to try and simulate the economy by buying corporate bonds. Also helping to support a rally were comments from the UEA and Iraq. The UAE’s Energy Minister, Suhail al-Mazrouei, said it still plans to increase the UAE’s oil output capacity to 5 million bpd by 2030. The minister said he has confidence that OPEC+ countries with poor compliance will meet their commitments with the agreed output targets. He believes demand will recover at a pace to make OPEC+ oil cuts adequate, unless there is a second wave of COVID-19. Iraq’s newly appointed Oil Minister Ihsan Abdul Jabbar Ismail, said Iraq will export an average of 2.8 bpd of oil in June, adding that it was in the country’s interest to comply with an OPERC+ deal to cut production.
In its oil market report that IEA said that oil demand will not fully recover until 2022.
Just released this morning US May retail sales jumped 17.7%, the biggest monthly jump ever. This is after being down 16.4% in April as retailers were beginning to go into lockdown because of the coronavirus.