The Day at a Glance | June 16 2020

Trump prepares new infrastructure plan

According to news reports that cited sources close to the White House, President Donald Trump is preparing an investment and infrastructure plan of up to $1 trillion dollars as a measure to revive economic activity in the United States. A preliminary version from the Department of Transportation proposes most of the resources for the construction of roads, highways and bridges in addition to funds for the development of 5G technology. Details are still being discussed and nothing has been formally presented; it`s unclear how the administration would authorize spending and where the funding would come from. On September 30th, the infrastructure financing law loses its force, which is why a new proposal must be presented in order to substitute it. The idea appears in midst of discussions about greater economic stimuli in light of the virus`s severe impacts on the economy. Figures published this morning concerning retail sales showed a strong recovery in consumption during May (17.7% monthly; -6.1% annual) after the end of social distancing in the most US states. Figures exceeded estimates by a lot and increase confidence of a fast recovery in consumption if the virus is kept under control.

IEA expects a strong recovery in demand for crude oil in 2021

In its monthly report, the International Energy Agency forecasted a 8.1 million daily barrel contraction in demand this year, but for 2021 it expects a record recovery of 5.7 million daily barrels (mdb), which would allow a return to market equilibrium. In April, the demand for crude oil in China was practically at levels seen last year, while demand picked up in India during May. If this trend continues in other countries, the oil market could reach stability towards the end of 2020, even though the environment`s uncertainty must not be underestimated, according to the IEA. Because of the collapse of air transportation alone, demand has fallen back up to 3 mdb and it`s expected that only a 1 mdb recovery will be seen in 2021. Inventories at a global level remain high (3.1 billion barrels in the OECD) and some companies continue to face the consequences of low prices: Chesapeake Energy in the US could declare bankruptcy as soon as next Thursday if it doesn`t reach a successful negotiation regarding its share of debt owed to creditors.