The Wall Street Journal - 03.04.2020

A10| Friday, April 3, 2020 THE WALL STREET JOURNAL.

many analysts said, and might

even cause greater problems.

“It’s physically impossible

for Saudi Arabia and Russia to

get 10 million barrels a day off

the market—they’d burst their

onshore storage and fill every

ship in sight,” said Edward

Marshall, a commodities

trader at Global Risk Manage-

ment. “Even with OPEC on

board, that’s a phenomenal

amount of oil, and it’ll be very

difficult to get everyone on

side.”

The slide has hit energy

companies hard, pushing many

to the brink and dashing oth-

ers’ plans to restructure their

operations. Shares of Exxon

and ConocoPhillips have both

shed more than 40% of their

value so far in 2020. Earlier

this week, U.S. shale driller

Whiting Petroleum Corp. filed

for bankruptcy protection, be-

coming the first sizable frack-

ing company to succumb to

the crash in oil prices.

Some other shale producers

have asked Texas regulators to

consider limiting the state’s

output for the first time in de-

cades. Texas Railroad Commis-

sioner Ryan Sitton said on

Twitter late in Thursday’s ses-

sion that he had spoken with

Russian energy minister Alex-

cuts,” said Spencer Welch, di-

rector of oil markets at IHS

Markit. “It’s not just [requir-

ing] the Russians coming back

and offering significantly more

cuts than at the last OPEC+

meeting, but you’ve also got

hundreds more producers

across the U.S. needing to pass

the legislation to enforce

those cuts.”

The two periods of the

sharpest oil inventory builds

in recent years were in early

2005 and early 2015, when

stocks rose by around 400

million barrels, according to

IHS Markit data. But currently,

IHS expects global oil invento-

ries to rise by three times that

amount in the first half of this

year.

Fears that stockpiles will

reach their limit in the coming

months are another factor

keeping some analysts cau-

tious.

“There is some part of cau-

tious optimism in me but it’s

deeply entangled with a po-

tential economic recovery and

the uncertainties around that,”

said Marwan Younes, chief in-

vestment officer at Massar

Capital Management, a New

York-based hedge fund.

—Amrith Ramkumar

contributed to this article.

Despite traders’ enthusiasm on Thursday, oil inventory is filling up and demand shows no signs of coming back. A refinery in Russia.

ALEXEY MALGAVKO/REUTERS

fered a glimmer of hope that
major producers can avoid a
protracted conflict, lifting
shares of beleaguered energy
companies.
Energy shares have been
the best-performing group in
the S&P 500 so far this week.
On Thursday, shares of Exxon
Mobil Corp. rose 7.6% and
Chevron Corp. advanced 11%.
“This is a positive surprise
for the market, but we’re still
a long way off from seeing ac-
tual material cuts,” said Gary
Ross, chief executive of Black
Gold Investors LLC. “Demand
is still being devastated.”
U.S. crude oil closed up
$5.01, or 25%, at $25.32 a bar-
rel, logging its largest percent-
age gain on record, according
to a Dow Jones Market Data
analysis of figures going back
to 1983. Brent crude, the
global gauge of prices, rose
$5.20, or 21%, to $29.94, also
recording its best day ever in
data going back to 1988.
The gains marked a rare
bright spot for oil prices in re-
cent weeks. Both Brent and
U.S. crude are still down more
than 50% so far this year,
leaving many traders skeptical
that production cuts alone can
lift prices back near recent
highs.
Capping traders’ enthusi-
asm: Oil storage is rapidly fill-
ing up while demand for fuel
has plummeted, with swaths
of the globe shutting down all
but essential services in an ef-
fort to combat the spread of
the coronavirus.
Factories and restaurants
have closed. Airlines are scal-
ing back on flights and people
aren’t driving. Many expect a
deep recession world-wide. In-
vestment banks and commodi-
ties trading houses have
slashed their forecasts for
daily global oil demand by
tens of millions of barrels.
A truce between the Rus-
sians and Saudis would do lit-
tle to shift those dynamics,

ContinuedfromPageOne

Crude Posts

ARecord

Price Leap

WORLD NEWS

ander Novak about coordi-

nated cuts globally of 10 mil-

lion barrels a day.

Mr. Trump is set to meet

Friday with the heads of some

of the largest U.S. oil compa-

nies to discuss measures to

help the industry as it fights

for survival. The chief execu-

tives of Exxon and Chevron

are expected to attend.

Investors were hopeful that

Mr. Trump’s tweets signaled a

thaw in the price war, which

began in early March, after the

Saudi-led Organization of the

Petroleum Exporting Countries

and a group of other oil-pro-

ducing countries dominated by

Russia failed to deepen pro-

duction cuts by 1.5 million

barrels.

But some analysts doubt

that coordinated cuts of the

size he described Thursday are

even possible.

“It’s highly unlikely these

parties would agree to these

January

U.S. crude oil, daily change

Source: Dow Jones Market Data

30

• 
  


• 
  


• 
  

0

10

20

%

February March April

March 18

Price hits 18-year low

April 2

Saudi Arabia signals

output cuts possible

March 6

OPEC and Russia can’t

reach a deal to cut output

March 9

Decline after Saudi Arabia says it

will cut prices and raise production

After bitter clashes last

week over a collective eco-

nomic response to the corona-

virus crisis, European authori-

ties have rolled out proposals

aimed at convincing Spain and

Italy the bloc is serious about

standing together.

The European Union’s exec-

utive body proposed a €

billion ($110 billion) plan

Thursday to help governments

fund programs to keep people

in work. French Finance Min-

ister Bruno Le Maire detailed

a proposed long-term corona-

virus impact fund.

Even in the Netherlands,

where top officials were the

target of fury last week from

hard-hit southern European

countries, the government has

proposed a multibillion-euro

coronavirus fund with no con-

ditions attached.

The proposals represent a

significant shift and some have

the potential to provide real

relief for the economies worst

impacted by the pandemic. But

rifts remain deep regarding the

scale of the response needed

and whether, sooner or later,

European governments will

need to jointly issue common

debt to meet mounting costs.

The European Commission’s

proposal to raise €100 billion

directly from the markets is

its most ambitious yet. The

body also suggested making

available tens of billions of eu-

ros in EU funds this year and

next that previously were ear-

marked for specific programs.

The commission is asking

member states to provide

guarantees valued at €25 bil-

lion for the jobs fund, which

would lend directly to national

governments to pay for short-

term job programs.

There would be no cap on

the amount each country

could receive.

BYLAURENCENORMAN

ANDNOEMIEBISSERBE

EU Jobs

Proposals

Get Some

Traction

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