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Oil prices have fully recovered from the pandemic

2021-02-10T01:04:43.097Z


Oil prices rebound again after 12 unstable months due to the coronavirus, which plummeted global demand.


The oil company BP will invest billions in clean energy 1:30

(CNN Business) ––

After 12 unstable months, oil prices are picking up again.

The value of crude oil plummeted as COVID-19 reduced energy demand around the world.

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What is happening?

Brent crude futures, the global benchmark, have surpassed $ 60 a barrel.

It is its highest level since January 2020.

The immediate catalyst appears to be President Joe Biden's comment over the weekend that the United States will not suspend sanctions against Iran to bring Iran back to the negotiating table.

However, oil prices have been on the rise for months.

Precisely, due to optimism that the coronavirus vaccines will unleash demand, while producers avoid flooding the market with supplies.

Oil prices are once again above $ 60 a barrel.

The blue line shows the Brent crude futures.

“Now that COVID-19 cases are decreasing in certain regions, including the US and Great Britain, there will be a ray of light that the worst is over.

Especially as vaccine administration increases. '

This was the analysis of Warren Patterson and Wenyu Yao, ING's commodity strategists, in a recent note to their clients.

Oil demand: important for your world prices

There are also significant signs of recovery in demand in high-growth economies such as China, India and Brazil, UBS oil analyst Giovanni Staunovo told me.

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The demand path definitely "points upward," he said.

Meanwhile, growers are working hard to keep the supply under control.

This with the aim that the significant reduction of inventories, which were filled last year, can continue.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies agreed to keep production broadly stable in February and March.

While Saudi Arabia said it would voluntarily reduce its production by 1 million barrels per day from January levels.

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Producers in the United States, for their part, are expected to need more time to recover.

"Investment activity has been relatively subdued and it will take time to see a bigger impact," explained Staunovo.

Taken together, this is good news for oil prices.

The trend has supported stocks in oil companies like Exxon and Chevron since November.

That being said: these stocks remain well below the level where they were before the pandemic.

Which underlines the long way to go.

What to expect in the face of oil prices?

If investors become concerned that asset prices have moved too high, too fast, both stocks and oil prices could face pressure.

And the demand forecast remains dark.

Especially since the new variants of the coronavirus complicate the deadlines to return to normality.

AstraZeneca said over the weekend that its COVID-19 vaccine showed limited protection against the variant first identified in South Africa.

The company is working to develop a new version that it could roll out this fall.

Remember: last month, the International Energy Agency lowered its forecast for global oil demand in 2021. The entity cited "renewed lockdowns in several countries" that would affect fuel sales.

Oil companies are also mired in a serious debate over whether demand can fully recover.

Looking ahead to the next 12 months, the outlook looks more hopeful, but with many unknowns.

Hyundai and Kia: We're not talking to Apple about autonomous car deal

Shares of Hyundai and Kia tumbled on Monday after South Korean companies said they are not in talks with Apple to develop autonomous cars.

Which puts an end to weeks of speculation.

"We are not having discussions with Apple about the development of autonomous cars," Hyundai said in a statement.

The ruling added that Hyundai has received requests from "numerous companies" about the development of autonomous electric cars.

However, he noted that "no decision has been made, as we are in the initial stage."

Apple declined to comment, my CNN Business colleagues Jill Disis and Gawon Bae reported.

The announcement shook investors who had bet on some kind of link between the companies after the news reports.

Kia shares plunged nearly 15%, its worst day since at least 2001, according to data provider Refinitiv.

The drop took $ 5.4 billion of its market value.

Hyundai's shares fell more than 6%, losing about $ 2.8 billion in market value.

Apple's interest in South Korean automakers made sense.

Analysts have noted that Hyundai has been open to joining forces with tech companies.

It already has partnerships with Chinese search giant Baidu and American chipmaker Nvidia on autonomous driving, for example.

The big question: If Apple moves forward with its car, the prevailing wisdom is that it would choose to work with an experienced manufacturer.

But who?

Analysts have also presented Honda and Volkswagen as possible options.

And attention can now be directed in that direction.

Despite huge losses, U.S. airlines are awash in cash

The US airline industry just closed the worst year in its history.

But still companies ended 2020 awash in cash, my CNN Business colleague Chris Isidore reported.

The nation's four largest airlines - American, Delta, United and Southwest - closed last year with a total of $ 31.5 billion in cash on their balance sheets.

That's up from $ 13 billion a year earlier, before the pandemic hit.

What it implies: Although these airlines spent $ 115 million a day over the course of the last nine months of 2020, easy loans have allowed them to shore up their finances.

Like a distressed family flooded with credit card deals, airlines have many people on Wall Street eager to lend them money or help them raise funds from investors.

Rock-bottom interest rates play an important role.

"Liquidity is at record levels," said Philip Baggaley, chief credit analyst for the airline industry at Standard & Poor's.

"That's good, and it's one of the few strengths they have at the moment," he said.

In addition to selling bonds and obtaining loans, airlines have mortgaged their planes, frequent flyer programs and other assets.

They have even sold additional shares, an unusual move for a sector in crisis.

Meanwhile, they have made big cost cuts.

"I think the general feeling is that they are hurt, but they will make it," Baggaley said.

What's coming

This Wednesday: Earnings include Twitter, Nissan, Honda and Total.

Oil prices

Source: cnnespanol

All news articles on 2021-02-10

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