IEA expects largest ever drop of global oil demand, US retail sales bounce back by a record 17% in May, and jobless claims in US remain at historical highs

15th Jun – 19th Jun

1. Despite reopening, jobless claims in US remain at historical highs

Jun 18, 2020

According to the US Labour Department’s Weekly Report, the number of initial jobless claims in the United States totalled 1.5 million last week, despite continuous reopening efforts across the nation. The US Fed Chairman Jerome Powell was quoted as saying that the economy is beginning to recover from the worst of the coronavirus crisis, but with some 25 million Americans displaced from work and the pandemic ongoing, it will need more help.

Source: Business Standard

2. International Energy Agency (IEA) expects largest drop of global oil demand in history this year

Jun 16, 2020

The IEA has said that oil demand was expected to fall by 8.1 million barrels per day in 2020, before growing by 5.7 million barrels per day in 2021. The IEA also said that the global oil demand in the second quarter was 17.8 million barrels per day lower, when compared to the same period last year. The IEA expects global oil demand to fall by 8.1 million barrels per day in 2020, before growing by 5.7 million barrels per day in 2021.

Source: CNBC, IEA

3. US oil inventory continues to climb, offsetting rise in fuel demand

Jun 17, 2020

The Energy Information Administration (EIA) reported on Wednesday that U.S. crude inventories rose by 1.2 million barrels for the week ended June 12. Inventory levels could rise further in the future, as the oil market is not currently pricing in a significant probability of either a second wave of the coronavirus cases in key consumers, or the associated lockdowns. Earlier this month, OPEC has warned in a monthly report that the market would remain in surplus in the second half, and expects supply from outside the group to be about 300,000 bpd higher than previously thought.

Source: CNBC

4. Copper trading on the CME and London Metal Exchange tumbled in May 2020

Jun 13, 2020

Copper trading on the CME, and the London Metal Exchange tumbled last month, as funds and speculators fled from high volatility during the coronavirus pandemic, but volumes shot up in top metals consumer (China), as lockdowns were lifted. The CME Group trading volumes in Comex copper futures and options plummeted 40% to 1.26 million contracts in May, compared to last year. The larger London Metal Exchange saw volumes slide 26% to 2.12 million lots last month, according to official data from the exchanges.

Source: Reuters

5. OPEC to increase compliance, and monitor production cuts more closely

Jun 19, 2020

An OPEC+ ministerial panel met on Thursday, and decided to improve compliance with quotas to support oil prices. The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, have been cutting output by a record 9.7 million barrels per day (bpd), or 10% of global supply since May 1.

Source: Reuters

6. US retail sales bounced back by a record 17% in May from April's low

Jun 16, 2020

U.S. retail sales bounced back in their biggest month-to-month jump ever on record in May. COVID-19 lockdowns ended in the US, and consumers went out to spend money again. According to an US Department of Commerce official release, retail sales rose by 17.7 per cent in May, more than twice against the market expectations.Motor vehicle sales jumped 44.1 per cent, building materials were up 10.9 per cent, non-store sales rose nine per cent, and restaurant receipts surged 29.1 per cent. In previous months, retail sales fell by 8.3 per cent in March, and a further 14.7 per cent in April, after the coronavirus lockdown.

Source: Business Insider

7. China to purchase American farm goods to comply with the phase one trade deal

Jun 19, 2020

China is planning to accelerate purchases of American farm goods to comply with the “phase-one” trade deal. China intends to step up the buying of soybeans to corn and ethanol, after purchases fell behind, due to the coronavirus disruptions. China pledged to buy $36.5 billion worth of American agricultural products under the “phase-one” deal, up from $24 billion in 2017, prior to the trade war.

Source: Bloomberg

8. India’s soybean output could be up 15% this year, in case the monsoon progressed as expected

Jun 15, 2020

If the monsoon rains pan out as predicted, we can expect Soybean acreage to top last year's levels; even the yield would be higher. This should lead to a 15% rise in the country's soybean crop in 2020-21 (Jul-Jun). Soybean production in 2020-21 is seen around 14 mln tn, against 12.2 mln tn of soybean last year.

The crop's acreage is seen rising in Maharashtra and Rajasthan. Depending on monsoon showers, farmers in Maharashtra are likely to sow the oilseed across 3.9 mln ha, as against 3.6-3.7 mln ha last year, while in Rajasthan, the acreage may rise by 100,000 ha to around 900,000 ha. Monsoon typically covers the major soybean-growing states by July.

Source: Cogencis

9. India’s cotton exports turn viable on low prices, and FX weakness

Jun 18, 2020

Strong overseas demand and weakness in the Indian currency have provided a much needed fillip to Indian cotton exports, which could touch 5.0 mln bales in the marketing year 2019-20 (Oct-Sep), around 300,000 bales higher than the earlier estimate of 4.7 mln.

The fall of the Indian currency has made domestic cotton attractive for Asian buyers. Currently, Indian cotton is being offered at 61-62 cents a pound on cost and freight basis, 5-8 cents lower than the crop from the US and Brazil. Indian cotton is the cheapest in the world, and there have been enquiries from Bangladesh, China and Vietnam.

Source: Business Line