Crude oil storage capacity will be depleted by the middle of the year: IEA
The International Energy Agency (IAE) forecasts a record fall in demand for crude oil this year, which will deplete the storing capacity by halfway through the year, despite agreed upon cutbacks by OPEC+. The IEA expects a contraction in demand of over 9 million barrels per day in all of 2020, which is equivalent to the projected growth for the next decade. If confirmed, this would be the greatest fall in the consumption of crude oil in history and will exhaust all existing capacity to store it. OPEC`s agreement will not come into effect until May, which is why the IAE expects production to continue to flood the market in April, as demand will fall to its lowest level since 1995. This will cause the saturation regarding the storage infrastructure, and it`s expected that just in the first half of 2020 inventories will accumulate up to 12 million barrels a day; something that could “overwhelm the logistics of the oil industry”. The increase in inventories will continue to put downward pressure on sinking international prices of oil, and for the IAE, “We may see further downward pressure on prices in coming days and weeks”. The extension of COVID-19 mitigation measures around the world has caused a substantial reduction in demand for oil, and in 2020, it has lost 2/3 of its value. The WTI lists oil under $20 dpb.
China criticizes Trump for suspending WHO funding
Yesterday, President Donald Trump announced he instructed his administration to temporarily suspend World Health Organization (WHO) funding, which currently coordinates international efforts to contain the virus as well as the research for treatments and vaccines. Trump argued the organization failed in its responsibility to share valuable and reliable information during the start of the outbreak in China, by blindly trusting Chinese data. “The reality is that the WHO failed to adequately obtain, vet and share information in a timely and transparent fashion”, said President Trump, adding that the WHO failed in its “basic duty and must be held accountable”. In the United States, criticism has grown concerning Pekin`s government for obscuring the dimension and gravity of the outbreak in the first months of the year. China, on its part, has criticized the US`s decision and has considered it a mistake that will reduce the WHO`s capabilities in light of the pandemic and will affect international cooperation to face the emergency. China assures it sent adequate information to the WHO in a timely manner. The discussion reignites friction between both global powers in an already complicated environment. “Now is the time for unity and for the international community to work together in solidarity to stop this virus and its shattering consequences”, said Antonio Guterres, United Nations Secretary General. It`s not clear if the suspension of funding the WHO falls under the US President`s authority, for this is usually approved by Congress. Members of the administration have assured the suspension of funding the WHO will last 60 days. The United States has granted the Organization close to $893 million dollars in the last two years.
Historic fall in retail sales in the United States
The US Department of Commerce confirmed retail sales recorded their largest monthly contraction in the last 30 years in March 2020. The contraction reached (-) 8.7% monthly (-6.2% annual), exceeding analyst consensus estimates. This data reflects total closures in large part of the United States due to efforts to control de spread of COVID-19. The largest setback was recorded in clothing and accessories sales (-50.7% annual), with increases recorded only in foods and beverages (+28% annual). Figures reflect the impact the health emergency has had on consumption, and even though the report went into less detail than it usually does due to difficulties to collect information, the Department of Commerce assured its indicator meets standards for its release.