30.03. Refineries around the world begin to suspend due to reduced demand

Oil refineries around the world have begun to suspend production or reduce refining volumes, as fuel demand has come under serious pressure from the coronavirus pandemic.

According to Reuters, global demand for fuel will decrease by 15-20% in the next quarter, mainly due to the cessation of most air travel around the world.

On Friday, it became known about the shutdown of refineries in India and Italy. Factories in other countries are taking the necessary measures to reduce refining volumes, including in the USA, Great Britain and Germany.

A decrease in the demand for petroleum products is parallel to a drop in demand for raw materials themselves. According to the head of the International Energy Agency (IEA), global demand for oil due to coronavirus could fall by 20 million barrels per day, and oil storage could soon be full.

31.03. Oil will remain below $40 due to coronavirus shock and OPEC + collapse

The price of oil in 2020 will be kept below the level of $40 per barrel. This conclusion was reached by Reuters experts, having analyzed the prospects of the current situation in the world. Currently, measures to curb the global spread of coronavirus adversely affect oil demand, and the collapse of the OPEC+ contributes to an increase in the surplus of raw materials.

Analysts expect the average Brent price to be $38.76 per barrel this year. Today, Brent and WTI are trading just above $20 a barrel. Moreover, back in January, the cost of «black gold» exceeded the current price by 70%.

Pressure on the oil market is exerted by restrictions related to coronavirus and weakening demand, as well as the price war between Saudi Arabia and Russia, which caused the flood of the market with raw materials.

Experts predict that global oil demand may decline by 0.7-5.0 million barrels per day in 2020, which will be the maximum reduction since the financial crisis in 2009.

01.04. Germany and Canada will be hit hardest by world coronavirus outbreak

Analysts believe that the economies of Germany and Canada are the most susceptible to the shocks associated with coronavirus due to their dependence on trade. The rapid proliferation of COVID-19 in the United States and the associated economic consequences can pose significant challenges for Canada. According to the Geneva International Trade Center (ITC), in 2019 Canada imported $453 billion worth of goods from the United States, including cars, equipment, and oil.

And Germany is particularly vulnerable to production shocks because of its dependence on foreign demand for German equipment, cars and pharmaceuticals. According to ITC, in 2019 Germany exported $1.49 trillion worth of goods.

Experts note that open economies will suffer a longer period of time from the effects of coronavirus on supply and demand. Even after the virus spread is controlled domestically, countries with open economies will continue to suffer from the effects of the virus due to falling demand in countries that are still struggling with the crisis.

06.04. Sentix: eurozone investor sentiment drops to record low

According to Sentix analytics, investor sentiment in the eurozone fell to a record low in April, as the bloc’s economy declines in the wake of the coronavirus pandemic.

The Sentix index, which measures investor confidence in the eurozone, fell to -42.9 points in April from -17.1 points in March. Analysts predicted a decline in the indicator to -30.3 points.

Sentix Managing Director Patrick Hussey noted that the current situation is much worse than the 2009 crisis, and economic forecasts underestimate the volume of economic contraction.

In Germany, the investor sentiment index fell to -36 points from -16.9 in March, reaching the lowest level since March 2009.

07.04. Industrial production in Germany unexpectedly increased in February

Industrial production in Germany in February unexpectedly showed an increase. At the same time, the Ministry of Economy of Germany noted that the decline in production will still be recorded in March and April – due to the measures introduced by the authorities to combat coronavirus, which undermined business activity in the country.

According to recent data, industrial production in February increased by 0.3% compared with January. Analysts polled by Reuters on average predicted a decline of 0.9%. Consumer goods output in Germany increased by 1.8%. At the same time, the output of capital goods fell by 0.3%.

Experts note that Europe's largest economy has been hit hard by the effects of the coronavirus pandemic and is expected to fall into recession in 2020.

Europe will need €500 billion to fight against coronavirus effects

Eurozone finance ministers held a videoconference, during which they expected to agree on the main issues of the plan to restore the economies of the region in the amount of €500 billion. The meeting and discussions lasted 16 hours, negotiations will continue tomorrow, April 9.

Eurogroup Chairman Mario Centenu noted that the negotiations have come to their logical conclusion, but an agreement on a number of issues has not yet been reached. In particular, disagreements between Italy and the Netherlands on the conditions under which loans should be provided to eurozone countries to combat the pandemic prevented progress in the negotiations.

The plan for supporting and restoring the economies of European countries will become the largest in the history of the European Union and its implementation will allow us to overcome the global crisis without losses.

The recovery program involves financing schemes to protect jobs (€ 100 billion), the European Investment Bank's business support program (€ 200 billion), and a program to support the most vulnerable states (up to € 240 billion).

09.04. The number of applications for unemployment benefits in the United States sets records

According to the US Department of Labor, in the first week of April, the number of initial applications for unemployment benefits fell by 261 thousand from the previous week's revised figure of 6.867 million and amounted to 6.606 million. In just the last three weeks, applications for this social payment came from 16.7 million people.

From March 2019 to March 2020, the total number of applications filed was only 11.5 million.

Analysts had expected a decrease in the number of applications of 1.398 million from the previous week's previous level of 6.648 million.

10.04. EU agrees €500 billion rescue package

The finance ministers of the European Union (EU) have agreed on a plan to save the bloc’s economy in the context of the coronavirus pandemic and economic crisis worth more than 500 billion euros.

In particular, within the framework of the European Stabilization Mechanism (ESM), about 240 billion euros will be allocated to those states that have suffered the most from the coronavirus pandemic and which are members of the euro area. 200 million euros will go to lending to European enterprises with an emphasis on small and medium-sized businesses, and about 100 billion euros will go to a wage subsidy scheme so that companies do not cut their employees.

After the decision of the finance ministers, this plan should be approved at a meeting of the European Council, the highest political body of the EU.

13.04. Saudi Arabia continues the price war

Saudi Arabia again went against its colleagues under the OPEC+ agreement and seems to have decided to continue the price war. Despite a deal concluded over the weekend to further reduce oil production, the Kingdom announced today that it is increasing discounts on its oil.

For example, the cost of a barrel of Arab Super Light in the Asian market is lower by $5.5 than in other regions. For Northern Europe, discounts will remain the same, but the southern countries of the Old World will be able to count on an increase in discount. Compared to the Brent price, the Saudi Arab Extra Light will cost $10.3 less.

Thus, despite OPEC's efforts to stabilize the oil market, the historic deal to reduce production remains so far only in theory. To see a more or less fair value, it is necessary to wait until quarantine measures are lifted in many countries.

14.04. China's GDP growth in 2020 may slow to a 44-year low

According to analysts, China's economic growth may slow to a minimum in almost half a century due to the crisis in many areas caused by the coronavirus epidemic.

In particular, the world's second largest economy can grow by only 2.5%, at the lowest rate since 1976. For example, last year, China's GDP increased by 6.1%.

Despite the fact that the Chinese government has begun to gradually ease restrictive quarantine measures, economic recovery is not expected in the coming months. Experts predict the loss of nearly 30 million jobs amid falling global demand.

In addition to the measures already taken, the People's Bank of China intends to reduce the required reserve ratio (RRR) for banks by another 100 basis points, as well as reduce the annual loan rate for first-class borrowers (loan prime rate, LPR) by 35 basis points to 3.70% by the end of 2020.

15.04. US suspended World Health Organization financing

US President Donald Trump announced that the United States is completing funding for the World Health Organization (WHO). In his opinion, the organization was unable to cope with its duties and functions during the coronavirus pandemic. Moreover, Trump accused WHO of concealing data on the spread of the disease.

The head of the White House also noted that the United States will look for alternative ways to work with other countries on health issues. Australian Prime Minister Scott Morrison has supported Donald Trump's criticism of the World Health Organization, but saying that Australia will continue to make contributions.

According to Morrison, WHO did not pay due attention to the problem of the virus during its first appearance in China and did not take appropriate measures. Donald Trump also accused the organization of opposing the US decision to close the border with China.

Many countries criticized the decision of the American president.

16.04. Another 5.2 million Americans file for unemployment

According to the US Department of Labor, the number of American citizens applying for unemployment benefits for the first time for the week ending April 11 was 5.245 million. The Ministry notes that Americans continue to massively apply for unemployment benefits for the fourth consecutive week.

The previous value was fixed at 6.615 million. Analysts had expected a decrease in the number of applications to 5.1 million.

Over the past month, more than 20 million applications have been filed amid the tough measures to combat the spread of coronavirus. The number of people continuing to receive unemployment benefits for the week ending April 4 increased by 4.53 million to a record 12 million.

Last month, the US economy lost 701 thousand jobs. As a result, in March unemployment jumped from 3.5% to 4.4%, peaking since August 2017. According to forecasts by Morgan Stanley, US unemployment will only continue to grow in the II quarter and will reach a record level of 15.7%.

20.04. China lowered key rate for the second time since the beginning of the year

Today China for the second time since the beginning of the year lowered lending rates to support the economy and the population affected by the coronavirus. The annual loan rate for first-class borrowers (LPR) has been reduced from 4.05% to 3.85%. The five-year rate affecting the cost of mortgages has been reduced from 4.75% to 4.65%.

Earlier, on April 15, the Central Bank lowered the rate on loans issued under the Medium-term Lending Facility (MLF) mechanism from 3.15% to 2.95% to reduce the cost of borrowing for companies. This level has become minimal since the introduction of the liquidity instrument in September 2014. Also, under the MLF, the regulator provided loans for one year in the amount of 100 billion yuan ($14.19 billion).

Recall that China's GDP in the I quarter of 2020 fell for the first time in 28 years – by 6.8% (to 20.65 trillion yuan).

21.04. Oil market collapses again

The situation in the oil market has again become the focus of attention of traders. For the first time in history, the price of WTI crude oil fell below zero (- $40 per barrel). This means that oil sellers are ready to pay extra to the buyer in order to get rid of crude.

Brent crude oil today collapsed to around $19 per barrel, updating multi-year lows. Pressure on quotes continues to be exerted by a catastrophic drop in demand due to the economic damage caused by the coronavirus epidemic, as well as an increase in supply.

The collapse of prices continues, despite the recently concluded new OPEC+ deal, according to which the producing countries will reduce production by 9.7 million barrels per day. As practice has shown, these measures have proved futile in the face of an oversupply in the oil market. OPEC estimates that about 14.7 million barrels per day may be unclaimed in the second quarter of the year. As a result, sales in the oil market may continue in the near future.

22.04. UK March inflation slows to 1.5%

According to the National Statistical Office (ONS) of Great Britain, consumer prices in March rose by 1.5% year on year compared with the February figure of 1.7%. Analysts had forecast inflation to fall to 1.5%.

However, it is worth considering the fact that these statistics were collected even before the large-scale restriction of economic activity in the country, so they do not reflect the current situation.

The slowdown in inflation last month was primarily due to a decrease in the price of automotive fuel (by 5.1%) and clothing (by 0.3%). Food prices rose 0.2% on a monthly basis and 1.3% on an annualized basis.

Core inflation (excluding food, alcohol, tobacco and energy, CPI Core) rose 1.6% after rising 1.7% a month earlier.

23.04. Eurozone business activity drops to a record low in April

Business activity in the eurozone in April reached another record low, which is a sign that the coronavirus pandemic is causing serious economic damage to the whole region.

According to preliminary data, the purchasing managers index (PMI) of IHS Markit in April fell to 13.5 points. In March, the same index already recorded the largest monthly decline to 29.7.

Chris Williamson, chief economist for business at IHS Markit, said that activity in the second quarter could record the worst recession in history. The International Monetary Fund (IMF) predicts a decline in the eurozone economy by 7.5% in 2020.

European leaders today should discuss further measures to stimulate the economy. Eurozone finance ministers have formed a €500 billion package of financial measures to deal with the economic shock caused by the pandemic, but each EU government believes that additional funding is still needed.

24.04. US Consumer Sentiment better than forecast in April

The University of Michigan Consumer Sentiment Index, which reflects household confidence in the US economy, fell to 71.8 in April.

The March indicator was fixed at 89.1 points. Analysts polled by Reuters expected a drop to 68 points.

The coronavirus pandemic has led to a loss of over 26 million jobs in the past five weeks. That’s more than the employment gains since the Great Recession.

27.04. Gold slips amid boost risk appetite

On Monday, the price of gold began to decline amid rising risk appetite after signs that countries could soon weaken coronavirus-driven lockdowns. The spot price of gold fell to $1,720.05 per troy ounce.

However, experts predict that the fall will not last long, as market participants hope for the introduction of new incentive measures by leading central banks.

The price of palladium rose by 0.72%, to $ 2.039.68 an ounce, and platinum – by 0.27%, to $761.80 an ounce. Silver fell 0.14% to $15.22.

28.04. Unemployment in Spain jumped to 14.4%

According to the National Statistical Institute of Spain, the country's unemployment rate rose to 14.4% in the first quarter of 2020. In the previous quarter, unemployment was 13.8%. Analysts predicted its jump to 15.6% in January-March.

However, these data only partially reflect the effects of restrictive measures introduced to combat coronavirus. Isolation measures were introduced just two weeks before the end of the quarter, and most of the research had already been done by then.

According to figures, about 898.822 thousand people have lost their jobs since March 12 in quarantine. The tourism and construction sectors suffered the most.

The Bank of Spain assumes that this year unemployment could jump to 21.7%, and the economic contraction could reach 12.4%.

29.04. US GDP drops 4.8%

According to the first estimate, US GDP in the first quarter of 2020 fell by 4.8%. Analysts had expected a decrease of 4%. A negative impact on the economy was exerted by measures of social isolation in response to the coronavirus pandemic.

A key component of GDP (consumer spending) fell by 7.6%. At the same time, private gross investment continued to decline for the fourth quarter in a row, losing another 5.6%. Exports fell by almost 9% and imports by 15%.

It is worth considering that the negative impact of COVID-19 on the country's economy began in March. In this regard, experts predict an even more significant blow to the economy in the II quarter. Here, drop estimates range from 20% to 40%.

30.04. ECB leaves interest rates unchanged

According to the results of the meeting on Thursday, the European Central Bank (ECB) kept the base interest rate on loans at zero and the deposit rate – at minus 0.5%. The margin lending rate was left at 0.25%. These decisions coincided with the expectations of most experts.

The ECB also said that rates will remain at the current level or lower until inflation in the eurozone approaches the target of the Central Bank. The regulator also announced the launch of a new long-term lending program for Eurozone banks, lowered its interest rate on long-term lending operations (TLTRO III) and announced its readiness to increase the scale of the Pandemic Emergency Purchase Program (PEPP), amounting to 750 billion euros .

In addition, the European Central Bank has promised to continue redeeming bonds under the PEPP program until it concludes that the crisis caused by the coronavirus pandemic has come to an end.

01.05. Baker Hughes announces April 2020 rig counts

According to Baker Hughes, an American oil and gas service company, the number of oil and gas drilling rigs around the world fell in April in monthly terms by 450 units, to 1,514, or 23%. In annual terms, the number of operating rigs decreased by 626, or 29.2%.

In the USA, according to the company, the indicator in monthly terms decreased by 206, or 26.7%, and amounted to 566, in Canada – by 100, or four times, up to 33 units.

The number of drilling rigs in Europe decreased by 11 (-8.9%) to 112. In the Middle East, the total number of rigs decreased by eight (-1.9%) and amounted to 420. In the Asia-Pacific region (APR), the number of rigs decreased by 40 (-17%), to 191, in Africa – decreased by five, or 4.6%, to 103. In Latin America, the indicator fell by 80 (-47.3%), to 89 installations.

05.05. US stocks rise in hope of global economic recovery

According to trading data, the main US indices are growing amid the emergence of prospects for the recovery of the global economy after the crisis caused by the coronavirus pandemic. Traders evaluate the news of the gradual lifting of quarantine measures in a number of countries, in particular in Italy.

Thus, the Dow Jones Industrial Average (DJIA) index grew by 1.27% – up to 24050.99 points, the index of high-tech companies NASDAQ – by 1.44%, up to 8836.43 points, the S&P500 wide market index increased by 1, 29%, up to 2879.55 points.

An additional factor of optimism on the exchanges is also the restoration of the oil market. Today, the price of Brent grade has reached $30.30, and WTI crude oil – $24 per barrel.

However, pressure on the US stock market had data on the US trade deficit. In March, the figure rose to $ 44.4 billion, turning out to be worse than the forecast of $ 44 billion.

06.05. US private sector reduces by 20.236 million

According to a US employment report from ADP, a record 20.236 million Americans lost their jobs in April. Analysts had forecast a decline of 20.050 million workers. Forced layoffs in response to an outbreak of coronavirus in the country led to an increase in the number of layoffs.

March data was revised downward to show that the number of jobs was reduced by 149 thousand jobs instead of the previously registered 27 thousand. Experts note that this was the first decline since September 2017.

Such a strong drop in private sector jobs has shown that quarantine restrictions to slow the spread of COVID-19 can have long-term disruptive effects on the US economy, even if non-core businesses open.

May, 07. Industrial production in Germany in March fell at a record pace

According to the German Ministry of Economics and Labor, industrial production in the country fell by 9.2% in March compared with the previous month, which was the largest decrease since the start of data collection in 1991. Experts predicted a decrease in industrial production by 7.5%.

The automotive industry showed a decline of 31.1% in monthly terms. Manufacturing production decreased by 11.6%. The production of capital goods fell by 16.5%. However, the performance of the construction industry showed an increase of almost 2%.

The orders of industrial enterprises in Germany in March fell by 15.6% compared to February, which also became the minimum value since the beginning of data collection in 1991.