The oil massive

Posted by: Paul Donovan

09 Apr 2020
  • OPEC is having a few friends over for a virtual production cut party. Algeria's energy minister spoke of "massive" production cuts. The problem is there have been even more massive demand cuts. Russia is muttering about a 15% production cut, but demand will stay extremely low until the economic phase two (bounce back) – probably in the third quarter.
  • OPEC presumably hopes its virtual meeting fares better than that of the EU. Bleary-eyed EU finance ministers switched off their webcams yesterday having failed to agree fiscal support measures. Leaving everything to the last minute is something of an EU tradition, but Italian Prime Minister Conte seemed less than happy.
  • Equity markets have become optimistic about when virus restrictions might be lifted. Today is a reminder of the economics, however. US initial jobless claims are due – over ten million Americans have lost jobs in the past two weekly reports. The numbers do include temporary unemployment, which is a harsher version of the European furlough programs.
  • UK monthly GDP is due, but sadly it is for February (and thus only of historical interest). US producer price inflation is for March, but presumably based on a smaller sample of prices (it is hard to survey prices in a lockdown).

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