Wall Street Week Ahead: Investors look to coronavirus data to support stabilizing markets

NEW YORK (Reuters) – Investors are parsing a broad range of signals, from infection counts to more traditional indicators, for clues on the trajectory markets may take in coming weeks as the pandemic caused by the novel coronavirus continues to spread.

Some point to signs that the worst of a vicious sell-off that took the S&P 500 .SPX down as much as 34% from its record closing high may be fading, though markets remain turbulent and far off their highs.

Volatility has eased from its March peaks. Fewer U.S. stocks are hitting new 52-week lows. Liquidity in fixed-income markets has improved, and credit spreads, while still wide, have come in from their March highs.

“Most of the damaging, indiscriminate selling was reached in mid-March,” said Keith Lerner, chief market strategist at Truist/SunTrust Advisory Services in Atlanta.

Economic indicators like employment data are only beginning to factor in the scale of economic damage wrought by the pandemic, leaving investors looking to various corners of the markets and information on the virus’ spread to gauge the direction asset prices are likely to take.

Investor sentiment, often seen as a contrarian indicator, is one signal pointing to an eventual turnaround in U.S. stocks. Bank of America Global Research’s Sell Side Indicator in March dropped to 54.9%. At that level or lower, U.S. stock returns over the following 12 months have been positive 94% of the time, the bank’s analysts wrote.

Contrarian indicator means bearish investors may presage a bullish market – and vice-versa.

Some investors have also noticed parallels between the spread of COVID-19, the disease caused by the novel coronavirus, and movements in the Cboe Volatility Index , known as Wall Street’s fear gauge.

The VIX, which climbed to its highest levels since 2008 amid the market sell-off, has closely tracked the number of countries where the daily growth of coronavirus cases exceeds 10%, according to Jason Hunter, head of global fixed income and U.S. equity technical strategy at J.P. Morgan.

The index has fallen as the number of countries with a sharp rise in cases has abated.

“Any improvements in that trajectory have the potential to limit the severity of an equity index retest this spring,” Hunter wrote in a research note. “More importantly, how the outbreak story evolves over the summer and into the fall will likely dictate the overall duration and magnitude of the bear market.”

Tracking the number of U.S. states with 10% or higher daily growth in confirmed cases reveals a similar pattern, Hunter found. The index on Friday stood at 48.43, below its all-time closing high of 82.69 on Mar. 16.

For now, the overall numbers look grim. Confirmed U.S. cases surpassed 256,000 on Friday. More than 6,500 Americans have died, according to a Reuters tally of official data, and more than a quarter of those deaths have been in New York City.

(For an interactive graphic tracking the spread of the novel coronavirus in the United, click here: here)

Economic data have been just as dour. On Friday, the Labor Department’s monthly payrolls report showed the U.S. economy shed 701,000 jobs in March, ending a record 113 straight months of job growth. The previous day, the Labor Department reported that weekly U.S. jobless claims hit a record 6.6. million.

That scale of market disruption has made some market participants more doubtful. Investors may be overly optimistic in their expectations for a sharp market rebound even if the number of U.S. coronavirus cases flatlines earlier than expected, said Nancy Perez, senior portfolio manager at Boston Private.

“The market has discounted a V-shaped recovery,” she said. “I don’t know if it’s discounted a U-shaped recovery. When people figure out it’s going to be more U-shaped, we may start giving some of (these gains) back.”

(This story removes extraneous word from headline.)

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Delta, other airlines apply for U.S. payroll grants for crisis help

CHICAGO/WASHINGTON (Reuters) – Delta Air Lines (DAL.N) and JetBlue Airways Corp JBLU.O> said on Friday they had applied for U.S. payroll grants meant to keep workers employed while airlines ride out their toughest crisis in history due to the coronavirus, but warned the funds are “not enough.”

The U.S. Treasury had asked passenger and cargo carriers to apply by 5 p.m. EDT (2100 GMT) on Friday to expedite up to $32 billion in payroll grants for the air industry within a $2.3 trillion coronavirus relief package approved last week. Airport contractors are also eligible for grants.

In a memo to employees, Delta Chief Executive Officer Ed Bastian said the company had applied for its share of worker-protection grants, but “those funds alone are not nearly enough.”

Delta expects a 90% decline in second-quarter revenue.

JetBlue also told employees it “may not get enough to cover pay and benefits at the level you see when we are flying at full capacity.”

Companies were allowed to request the amount they paid in salaries and benefits in the second and third quarters of 2019, and must agree to keep their workforce until Sept. 30, even as they drastically reduce flight schedules to match a dramatic drop in demand.

American Airlines, with the largest number of full-time employees among U.S. airlines at 133,700 in 2019, also submitted an application on Friday, a spokeswoman said, without disclosing the details.

American has said it would seek up to $6 billion in grants and $6 billion in government loans under a separate $32 billion funding option for the sector.

American stock hit a record low on Friday.

Treasury had asked companies to propose financial instruments such as warrants or equity options as possible taxpayer compensation, a condition many Democrats and airline labor unions had argued could dissuade airlines from taking money meant to protect workers.

United Airlines Holdings Inc (UAL.O) and Southwest Airlines Co (LUV.N) were also expected to apply, though they have also warned they may still shrink before year end.

Among cargo carriers, FedEx Corp (FDX.N) said it could benefit from certain government relief options after outlining other steps it is taking to save cash and boost liquidity, including slashing its chief executive officer’s pay and drawing down $1.5 billion from a credit facility.

Cargo carriers are suffering from disruption to global supply chains and high-margin business-to-business demand, even as ground-package delivery services increase.

Airlines have also raised debt and taken a series of cost-cutting measures as they ground an unprecedented number of planes and implement new policies on ticket refunds and exchanges in an effort to encourage passengers to book flights.

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Passenger airlines are eligible for $25 billion in cash grants, cargo carriers $4 billion and airport contractors like caterers and airplane cleaners $3 billion, and an equal amount in loans.

Other airlines across the world are also seeking government aid as they brace for a prolonged downturn, with Air France-KLM (AIRF.PA) in talks with banks to receive up to 6 billion euros ($6.5 billion) in loans guaranteed by the French and Dutch governments, sources told Reuters.

Planemakers are also preparing for a slump in demand, with Reuters reporting on Friday that Airbus SE (AIR.PA) is studying a sharp cut in output of its top-selling A320 jet series.

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Exxon plays on virus worries in Baytown contract talks: union official

HOUSTON (Reuters) – A union official said on Friday Exxon Mobil Corp is playing on economic uncertainty caused by the coronavirus pandemic in negotiations with workers at its Baytown, Texas, refinery.

The company has begun meeting with union-represented employees in small groups after rejecting two contract extension proposals from the union, said Ricky Brooks, president of United Steelworkers union local 13-2001, which represents hourly workers at Baytown.

“They’ve begun in-house scare and misinformation meetings, leveraging the uncertainty of COVID-19 to get all of their issues and force the union to forego all of its issues,” Brooks said. “They have held the pattern wages hostage if the union moves to go to the table.”

COVID-19 is the disease caused by the new coronavirus. Pattern wages refers to the national pattern agreement reached in January 2019 between the USW International and U.S. refiners that sets wage increases for all USW-represented workers.

Under the proposal rejected in January, pay was set to go up 3.5% in the first year and 4% in the second year. In the third year, the increase would match the pay hike in the new national agreement the USW will negotiate for oil industry workers with energy companies in January 2022.

Brooks said the company has suggested the pay proposals would be less if the two sides go back to the bargaining table.

Negotiations for a new contract to replace the current pact that expires on May 15 began in December with a company-proposed three-year extension that was rejected in January by workers in the 560,500 barrel-per-day refinery and the complex’s laboratory.

Chemical plant workers accepted the extension.

The sticking point for refinery and lab workers is Exxon’s proposal to lengthen by six months the time before a new workers’ wages reach the same level as veteran workers.

Exxon spokesman Jeremy Eikenberry declined to discuss the negotiations.

Even though the current contract expires on May 15, the refinery and lab workers could not walk off their jobs for 60 days nor could Exxon lock them out under an agreement between the company and the union.

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Trump says Bank of America, others doing 'great job' on small-business loans

WASHINGTON (Reuters) – President Donald Trump hailed one of the country’s largest banks, as well as many small lenders, for making small business emergency loans on the first day of a new U.S. coronavirus economic relief program.

“Great job being done by Bank of America and many community banks throughout the country. Small businesses appreciate your work!” Trump wrote in a tweet

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OPEC+ debates biggest-ever oil cut as pandemic crushes demand

DUBAI/LONDON/MOSCOW (Reuters) – OPEC and its allies are working on a deal for an unprecedented oil production cut equivalent to around 10% of global supply, an OPEC source said, after the U.S. president called on producers to stop the market rout caused by the coronavirus pandemic.

The meeting of OPEC and allies such as Russia has been scheduled for April 6, but details were thin on the exact distribution of production cuts. No time has yet been set for the meeting, OPEC sources said.

A global deal to reduce production by as much as 10 million to 15 million barrels per day would require participation from nations that normally have not exerted regulatory control over output, including the United States, now the world’s largest producer of crude.

Russian President Vladimir Putin said on Friday that his country was ready to cut production along with OPEC and the United States, while still blaming Saudi Arabia for the market’s collapse.

Oil prices have fallen to around $20 per barrel from $65 at the start of the year as more than 3 billion people went into a lockdown because of the virus, reducing global oil demand by as much as a third, or 30 million barrels per day. The coronavirus has infected 1 million people worldwide and killed more than 53,000.

Trump said on Thursday he had spoken with both Putin and Saudi Crown Prince Mohammed bin Salman. However, he said he did not make any concessions to Saudi Arabia and Russia, such as agreeing to a U.S. domestic production cut – a move forbidden by U.S. antitrust legislation. Some U.S. officials have suggested U.S. production was set for a steep decline anyway because of low prices.

Trump was scheduled to meet with U.S. oil producers on Friday afternoon. OPEC producers, along with Russia, are waiting to see if the United States commits to any efforts to stabilize the markets, two OPEC sources said.

“The U.S. needs to contribute from shale oil,” an OPEC source said. Russia has long expressed frustration that its joint cuts with OPEC were only lending support to higher-cost U.S. shale producers.

Russia’s energy minister, Alexander Novak, told Russian state media that he understands the United States has legal restrictions on output cuts, but it should still be flexible.

The International Energy Agency warned on Friday that a cut of 10 million barrels per day would not be enough to counter the huge fall in oil demand. Such an output cut would still result in a 15 million barrel per day increase in inventories in the second quarter, said Fatih Birol, the head of the agency.

White House economic adviser Larry Kudlow said Trump will fight any international collusion in energy markets that would hurt U.S. producers, but the administration cannot dictate to oil producers.

“I think … oil companies, seeing a decline in price are going to pull back on production. That’s just common sense,” he said, adding that he sees no reason why Trump’s talks with Saudi Arabia and Russia on oil will not “bear fruit.”

A second OPEC source said any cut must include producers from outside OPEC+, an alliance which includes OPEC members, Russia and other producers, but excludes oil nations such as the United States, Canada, Norway and Brazil.

Canadian Prime Minister Justin Trudeau said he has had direct communication with OPEC and the United States. The Norwegian oil and energy ministry declined to comment on Friday on whether Western Europe’s largest producer could cut its oil output to help support prices.

Jason Kenney, the premier of Alberta, Canada’s primary oil-producing province, said on Thursday that Alberta was open to joining a production-cut deal.

OIL PRICES RECOVER, FOR NOW

Oil prices recovered from the lows of $20 per barrel this week with Brent trading near $33 per barrel on Friday, still half its $66 closing level at the end of 2019.

Prices plunged in early March after Russia and Saudi Arabia could not come to an agreement to curb output. The Saudis shocked the oil industry with an aggressive series of steps to take back market share that included cutting export prices, pumping at maximum production and trying to sell cheaper oil to refiners that buy Russian crude.

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The oil market was dealt a heavier blow by the freefall in demand due to the coronavirus pandemic, which sent crude prices to their lowest levels since 2002, hitting budgets of oil-producing nations and slamming the U.S. shale oil industry, which cannot compete at low prices.

The oil-price crash spurred regulators in the U.S. state of Texas, the heart of the country’s oil production, to consider regulating output for the first time in nearly 50 years.

Major global producers have already scaled back production with or without OPEC, as fuel demand has dropped precipitously and storage is rapidly filling. This past week, U.S. drillers idled more rigs in one week than at any time in the last five years.

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U.S. small businesses flood Bank of America with loan applications

(Reuters) – Bank of America Corp (BAC.N) said on Friday it has already received about 35,000 applications for federally backed small-business loans within hours of starting to accept them.

The second largest U.S. bank by assets became the first major bank to accept applications for the massive small-business rescue program approved by Congress last week. But the bank was already being criticized on social media after its CEO said on CNBC that it was prioritizing existing customers.

“Speed is of the essence here for these types of small businesses,” Chief Executive Brian Moynihan said in a CNBC interview on Friday. “The money will start to go out the door once these applications are processed over the next short period of time.”

Small businesses, which employ about half of U.S. private sector employees, have been hit hard during the outbreak of the new coronavirus, which has caused cities to shut down non-essential businesses. Many people are staying home, which has sharply cut into consumer spending.

Bank of America’s consumer transaction volume fell from an average of $60 billion a week to $40 billion through March, Moynihan said.

Seeking to bail out millions of small businesses and slow unemployment, Congress included $349 billion for small firms in its $2 trillion stimulus package passed last week. Small businesses will need to rely on banks to get the funds.

Banks have been scrambling to prepare for overwhelming demand for the loans while awaiting guidance from the government. As of Friday morning, competitors JPMorgan Chase & Co (JPM.N), Citigroup Inc (C.N) and Wells Fargo & Co (WFC.N) were not accepting applications on their website.

“Wells Fargo is working as quickly as possible to be ready to assist small-business customers as part of the Paycheck Protection Program (PPP),” a spokesman said in a statement.

Bank of America is prioritizing processing applications for small-business clients that already have a borrowing relationship with the bank, Moynihan said.

“If you borrow from another bank … Please go back to them because they’re your core bank and they know you the best and can process you the fastest,” he said.

It has also drawn criticism from Florida Senator Marco Rubio, who chairs the Senate Committee on Small Business and Entrepreneurship. After hearing from a Bank of America customer who was denied a loan he called the credit account stipulation a “a ridiculous requirement that isn’t anywhere in law,” in a tweet on Friday.

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Sportswear maker Puma proposes suspending dividend due to virus

BERLIN (Reuters) – German sportswear maker Puma (PUMG.DE) proposed on Friday to suspend its 2019 dividend given the impact of the coronavirus pandemic.

Apart from China, Japan and South Korea, almost all of Puma’s stores have been temporarily closed by the authorities, the company said, while e-commerce accounts for less than 10% of the business.

“This has, of course, led to a major decline in net sales and cash inflow,” the Adidas (ADSGn.DE) rival said in a statement bit.ly/2wWZNbi.

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Airline industry braces for lengthy recovery from coronavirus crisis

SYDNEY/WASHINGTON (Reuters) – International seat capacity has dropped by almost 80% from a year ago and half the world’s airplanes are in storage, new data shows, suggesting the aviation industry may take years to recover from the coronavirus pandemic.

Carriers including United Airlines Holdings Inc (UAL.O) and Air New Zealand Ltd (AIR.NZ) have warned they are likely to emerge from the crisis smaller, and there are fears others may not survive.

“It is likely that when we get across to the other side of the pandemic, things won’t return to the vibrant market conditions we had at the start of the year,” said Olivier Ponti, vice president at data firm ForwardKeys.

“It’s also possible that a number of airlines will have gone bust and uneconomic discounts will be necessary to attract demand back,” he said in a statement.

ForwardKeys said the number of international airline seats had fallen to 10 million in the week of March 30 to April 5, down from 44.2 million a year ago.

Data firm OAG said that several years of industry growth had been lost and that it could take until 2022 or 2023 before the volume of fliers returns to the levels that had been expected for 2020.

Cirium, another aviation data provider, said about half of the world’s airplane fleet was in storage.

“While many of these will be temporary storage, many of these aircraft will never resume service,” Cowen analyst Helane Becker said in a note to clients. “We believe the airline industry will look very different when we get to the other side of this.”

Planemakers are looking at drastic cuts in wide-body production amid a slump in demand for the industry’s largest jetliners, manufacturing and supplier sources said.

Deliveries of long-range jets, such as the Boeing Co (BA.N) 777 or 787 and Airbus SE (AIR.PA) A350 or A330, have been particularly badly hit as airlines seek deferrals and many withhold progress payments.

“Governments need to ensure that airlines have sufficient cash flow to tide them over this period,” said Conrad Clifford, Asia-Pacific vice president at the International Air Transport Association.

Such support could include direct financial support, easing the way for loans and loan guarantees and backing for the corporate bond market, he added.

Polish national airline LOT is working on a rescue plan and will likely need state aid as air traffic has been suspended because of the coronavirus, Jacek Sasin, the country’s minister of state assets said on Friday.

FLIGHTS CUT, STAFF FURLOUGHED

U.S. domestic demand will remain weak into May, Vasu Raja, senior vice president of network strategy at American Airlines Group Inc (AAL.O), told Reuters, citing a lack of bookings.

The airline is cutting between 70% and 75% of domestic flights in April and about 80% in May. For both months it is cutting nearly 90% of its international flights.

U.S. Transportation Secretary Elaine Chao said that the government should not ground domestic flights during the crisis and that it was up to the airlines to make commercial decisions on flight destinations.

In Europe, budget carrier Ryanair Holdings PLC (RYA.I) said on Friday it expected to carry minimal if any traffic in April and May due to widespread government flight bans and restrictions. It is operating fewer than 20 daily flights, which is 99% less than usual.

Ryanair said it expected to take a 300 million euro ($324.93 million) charge in the financial year starting April 1 on its fuel hedges now that the oil price had fallen.

Hong Kong’s Cathay Pacific Airways Ltd (0293.HK) said on Friday it would further cut passenger capacity after carrying just 582 passengers one day this week, a load factor of 18.3%, compared to 100,000 customers on a normal day.

Air New Zealand carried just 165 passengers on its 89 flights on Thursday, underpinning its decision to make further cuts to its schedule while the country is in lockdown due to the virus, Chief Revenue Officer Cam Wallace said on Twitter.

Southwest Airlines Co (LUV.N) said it intended to apply for U.S. government aid to help it ride out the sharp drop in travel demand.

The stimulus package for airlines is worth up to $50 billion, half in loans and loan guarantees and half in payroll cash grants.

Many Democrats and airline labour unions are urging U.S. Treasury Secretary Steven Mnuchin not to demand equity or warrants in return for the grant portion, as they seek to ensure carriers take the funds and pay workers.

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Stocks climb on oil price surge despite grim U.S. jobs data

NEW YORK (Reuters) – World equity markets climbed on Thursday on a surge in risky assets like oil, offsetting concerns over an increasing death toll from the coronavirus pandemic that is expected to push the global economy into recession.

Investors sought the safety of the U.S. dollar and government bonds. Stocks and oil futures were among the few risk assets that advanced, with oil benchmarks surging 20% after U.S. President Donald Trump said he expected Saudi Arabia and Russia to reach a deal soon to end their oil price war.

MSCI’s gauge of stocks across the globe rose 1.20% after broad declines in Japan. European shares also rose 0.42% despite data showing U.S. weekly jobless claims jumped to a record 6.6 million, double the record from the previous week.

At the close of trading on Wall Street, the Dow Jones Industrial Average rose 469.93 points, or 2.24%, to 21,413.44, the S&P 500 gained 56.4 points, or 2.28%, to 2,526.9 and the Nasdaq Composite added 126.73 points, or 1.72%, to 7,487.31.

“Most of the selling was done yesterday in anticipation of the jobs number and investors were looking for entry points as everyone expected it to be bad and they have been,” said Jamie Cox, managing partner of Harris Financial Group in New York.

“A lot the trading has been on fixed income because if oil prices stabilize, that will stabilize the bond market and will feed through to reduced default risk.”

Investors sought the perceived safety of government bonds. Benchmark U.S. 10-year notes last rose 3/32 in price to yield 0.6251%, from 0.635% after trading hours on Wednesday.

The World Health Organization said the global case count would reach 1 million and the death toll 50,000 in the next few days. It currently stands at 46,906.

U.S. President Donald Trump, who had initially played down the outbreak, told reporters at the White House on Wednesday that he is considering a plan to halt flights to coronavirus hot zones in the United States.

In currency markets, the dollar rose 0.632% against a basket of six major currencies after a gain of 0.53% overnight. The euro traded down 0.99% at $1.0853 as the dollar advanced.

Brent crude futures jumped 20.9% to $29.91. U.S. West Texas Intermediate (WTI) crude futures soared 21% to $24.73.

Trump said he had talked with the leaders of both Russia and Saudi Arabia and believed the two countries would make a deal within a “few days” to lower production, thereby bring prices back up.

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Oil crash poses severe test for OPEC+ after Moscow, Riyadh miscalculate

DUBAI/LONDON (Reuters) – U.S. President Donald Trump says he has brokered a deal with Saudi Arabia and Russia that would see sweeping oil output cuts. Riyadh has called for emergency talks, and Moscow has said it no longer plans to hike production in a battle for market share.

But the question remains: even if the world’s top three producers reach an unprecedented pact to curb oil output, can any deal remove enough oil when the coronavirus has destroyed a third of global demand for crude? [nL8N2BQ36Q]

One thing, however, has become clear: as oil prices in the past three months made some of their biggest gyrations in history, taking action will prove a severe, if not impossible, test for OPEC+, the informal grouping that had propped up crude prices for three years until their agreement collapsed in March.

An OPEC source briefed on Saudi oil policy said the scale of the fall in demand might require action beyond the scope OPEC+ could take alone. “This is an extraordinary situation that needs extraordinary measures,” the source said.

Oil demand has dropped by as much as 30 million barrels per day (bpd), roughly equivalent to the combined output of Saudi Arabia, Russia and the United States.

The fall is also more than the total production of all members of the Organization of the Petroleum Exporting Countries, the group that for decades was the most powerful player in the oil market.

“The magnitude of the current disruption is far beyond what OPEC can deal with alone,” the Saudi state King Abdullah Petroleum Studies and Research Center wrote this week.

It said “greater international cooperation was needed” and predicted U.S. and other higher cost producers could suffer.

Neither Saudi Arabia nor Russia has directly asked the United States – which has become the world’s biggest oil producer on the back of the shale revolution helped by OPEC+ support for prices – to join the any output cuts, a move prohibited by U.S. antitrust law.

But, in reality, some degree of U.S. participation would be essential for any deal that hoped to make a difference to market fundamentals.

MISCALCULATIONS

“If the number of OPEC+ members increase and other countries join, there is a possibility of a joint agreement to balance oil markets,” one of Russia’s top oil negotiators, Kirill Dmitriev, who heads the nation’s wealth fund, told Reuters.

Still, how to respond revives the acrimonious debate in early March in Vienna, where Moscow and Riyadh fell out and the OPEC+ deal on supply curbs came to an abrupt end.

Saudi Arabia had pushed for deep additional cuts, saying it was no longer ready to shoulder the biggest burden of reductions and wanted others – with a finger pointed firmly at Russia – to take a more equitable share.

Moscow’s response was that deeper cuts made no sense until the full extent of the fallout from the coronavirus was known, given measures to combat the virus were bringing the world to a standstill, sending demand for jet fuel, gasoline and diesel into a nosedive.

Instead of finding a way to overcome their differences. Both sides misread the determination of the other to stick to their guns. Even as the finances of both nations took a pounding, they left the meeting promising to open the taps and grab market share with the inevitable result that oil prices crashed.

“Russia had miscalculated the Saudi response,” a veteran Russian oil insider said. “Moscow had never thought the Saudis would threaten to raise production so steeply. We thought they would just carry on with existing cuts.”

Saudi Arabia for its part also misjudged the magnitude of the oil demand collapse that sent oil prices to their lowest in almost two decades.

Riyadh quickly found that, in a market awash with crude, even usually reliable buyers don’t want more and steep discounts do little to change this. Oil majors and big importing nations alike have spurned the extra cargoes. [nL8N2BJ6O8]

CLAIMING VICTORY

Now both sides may now have a chance to reconsider – and possibly a way to claim they were both right. If a deal is reached, Riyadh can say pumping more crude forced Russia back to the table. If others join in, Moscow can say the virus has had a bigger impact than anything OPEC+ alone could have dealt with.

Trump, who has said Moscow and Riyadh “went crazy” by pumping more after their supply deal fell apart, stunned the market on Thursday by saying he had brokered a deal with Saudi Arabia and Russia.

“I expect and hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more which, if it happens, will be great for the oil & gas industry!” Trump wrote on Twitter, citing a figure for cuts that would be equivalent to 10% of global supply.

Trump was due to meet U.S. company executives on Thursday, but a senior administration official said U.S. domestic producers would not be asked to chip in with their own cuts.

However, even if U.S. producers don’t voluntarily take part, they may be forced to. With oil at such low prices, they may have to shut down a lot of higher cost oil production — or they will have ask for state funds to keep them afloat.

Any formal agreement to cooperate with OPEC would be complex because of the antitrust laws. But some U.S. shale producers in Texas have requested the energy regulator mandate cuts for the first time in 50 years – and one of the three commissioners at the U.S. energy regulator has said it might make sense to do so.

The commissioner, Ryan Sitton, held a call with OPEC Secretary General Mohammad Barkindo last month.

“There is so much oil and in some cases it’s probably less valuable than water … We’ve never seen anything like it,” Trump said after speaking to Putin.

U.S. officials have discussed a number of ideas about how the country can help manage global oil markets. [nL1N2BK2VY]

But in a nod to Moscow, Washington offered this week to begin lifting Venezuela sanctions if the opposition and members of the government agreed to form an interim government, shifting on a policy Moscow has called unfair. [nL1N2BO0FP]

The OPEC source said it was not clear what Washington could propose to Riyadh to alleviate the crisis.

It is also far from clear if the producers can act fast enough to make a swift difference in these turbulent times.

“You can see every now and then when Trump says he will talk to Putin about energy, the market picks up a bit,” said Saad Rahim, chief economist at trader Trafigura. “But … it’s too late.”

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