A deal between OPEC and nations including Russia to boost oil prices involves a 10 million barrels per day cut until July, then an 8 million barrels per day cut through the end of the year, though the cartel said Friday its approval hinges on Mexico's agreement.
A marathon videoconference call between OPEC and other producers lasted until early Friday morning, when it apparently devolved into a Mexican standoff. The cartel, Kuwait and Saudi Arabia say Mexico's refusal to agree blocked the proposed accord.
Mexico has yet to respond, though the deal comes as prices have been gutted by the coronavirus pandemic and the COVID-19 illness it causes. Analysts warn even these proposed cuts may not be enough to offset the loss in demand.
"COVID-19 is an unseen beast that seems to be impacting everything in its path," OPEC Secretary-General Mohammed Barkindo said at the start of the meeting, according to a statement. "There is a grizzly shadow hanging over all of us. We do not want this shadow to envelope us. It will have a crushing and long-term impact on the entire industry."
OPEC said the deal also calls for a 6 million barrel per day cut for 16 months beginning in 2021.
U.S. President Donald Trump earlier said he spoke with Russian President Vladimir Putin and King Salman of Saudi Arabia about the negotiations.
"They're getting close to a deal that's OPEC and many other countries outside of OPEC, and we'll see what happens," Trump said at a White House news briefing.
"There's so much production nobody even knows what to do with it, that's how it's working," he added.
But by early Friday, Kuwait Oil Minister Khaled al-Fadhel suggested the deal was not yet done.
"At the meeting for the OPEC group that ended at 3 a.m., Mexico disrupted the agreement of all the countries to reduce the production of oil by 10 million barrels a day," al-Fadhel wrote, without elaborating.
There was no immediate response from Mexico, though its Energy Minister Rocío Nahle wrote around the same time on Twitter that Mexico proposed cutting its output by 100,000 barrels a day for the next two months after producing 1.7 million barrels in March.
Saudi state television also quoted Energy Minister Prince Abdulaziz bin Salman as saying the OPEC+ deal "depends" on Mexico. OPEC also made that clear.
"The agreement is conditional on the consent of Mexico," OPEC said.
The baseline for the agreement sees Saudi Arabia and Russia, the two dominant producers, cutting back from 11 million barrels a day, OPEC said.
The oil market was already oversupplied when Russia and OPEC failed to agree on output cuts in early March. Analysts say Russia refused to back even a moderate cut because it would have only served to help U.S. energy companies that were pumping at full capacity. Stalling would hurt American shale-oil producers and protect market share.
Russia's move enraged Saudi Arabia, which not only said it would not cut production on its own but said it would increase output instead and reduce its selling prices in what became effectively a global pricing war.
In the time since, prices have collapsed as the coronavirus and the COVID-19 illness it causes have largely halted global travel. International benchmark Brent crude traded Friday over $31 a barrel while the U.S. benchmark West Texas crude traded under $23.
In Russia relies on oil as the main source of income and the price collapse caused the ruble to crash. That boosted the cost of imports and sped up inflation.
In his opening remarks at the start of Thursday's call, Russian Energy Minister Alexander Novak emphasized the need for "all oil-producing countries to pool efforts to change the situation of a significant global oversupply." He said global demand had fallen by 10-15 millions barrels a day.
"We believe it necessary to increase the number of countries that could join efforts to help stabilize the situation," he said, welcoming Norway, Canada, Indonesia and others that hadn't been part of the so-called OPEC+ talks.
Analysts, however, warn the proposed 10 million barrel per day cut for May and June will not be enough to offset plummeting demand for oil globally, and runs the risk of coming too late as storage capacity for oil nears its maximum. Even if North American producers took 5 million barrels a day off the market, there could still be an excess supply of 5-10 million barrels per day.
Research firm Rystad Energy estimates the imbalance for April is 27.4 million barrels per day. The firm says global storage of crude is already close to being filled to the brim, estimating that on average 79% of the world's oil storage capacity is already full. Around 7.4 billion barrels of crude and products are in storage, including 1.3 billion currently on board tankers at sea.
Chris Midgley, global head of analytics for S&P Global Platts, said the proposed cuts are unlikely to have any significant impact on April supply, and thus run the risk of getting close to exhausting all available storage in May.
However, a cut of 10-15 million barrels per day is enough to prop up oil prices and helps to reduce strain on crude storage facilities, analysts said.
Shares were mostly higher in Asia on Thursday though Japan's benchmark fell as local leaders sparred with Prime Minister Shinzo Abe's government over measures to contain the coronavirus outbreak.
After a 3.4% overnight rally on Wall Street, markets advanced in Hong Kong, Sydney and Shanghai. Investors seem reassured by signs that deaths and infections may be nearing a peak or plateau in some of the world's hardest-hit areas.
And a meeting of oil producers planned for Thursday has raised hopes energy companies might get some relief in the form of production cuts to help support crude prices amid collapsing demand.
Japan's Nikkei 225 index lost 0.3%, to 19,298.64, after the central bank governor said the economy faces "extremely high" uncertainty over the likely impact of the pandemic.
That uncertainty was heightened by disagreement between leaders over just how quickly and far to extend precautions meant to contain a surge in coronavirus infections.
Abe's spokesman said that after declaring a state of emergency for Tokyo and six other hard-hit areas on Tuesday, the government planned to see whether residents were complying with the entirely voluntary request to stay at home before deciding on whether or not to ask more businesses to close.
That ran counter to Tokyo Gov. Yuriko Koike's efforts to get stronger compliance, since so far the requests appeared to have achieved only about half of the 70-80% social distancing Abe said he was aiming for.
The governor of Aichi, a prefecture not included in Abe's state of emergency declaration and home to Toyota Motor Corp.'s headquarters, asked that it also be included. The region has reported dozens of police officers falling sick from the coronavirus.
Shares also fell in Taiwan, Malaysia and Indonesia.
But elsewhere in Asia, markets were mostly higher. Hong Kong's Hang Seng added 0.5% to 24,100.09 and the Shanghai Composite index gained 0.5% to 2,829.30. In Australia, the S&P/ASX 200 picked up 2.4% to 5,331.10 and South Korea's Kospi climbed 1% to 1,825.22. India's Sensex surged 2.1% to 30,526.79.
Futures for the S&P 500 and the Dow industrials edged higher.
Recent upward swings in markets have dwarfed declines amid signs that deaths and infections may be nearing a peak or plateau in some of the world's hardest-hit areas.
That's led some investors to begin looking to the other side of the economic shutdown that is gripping the world as authorities try to slow the spread of the coronavirus. The S&P 500 has jumped nearly 23% in the last two and a half weeks, building on earlier gains driven by massive amounts of aid promised by governments and central banks for the economy and markets.
"Risk assets continued to rally on the perception that the global economy will open up again quicker than expected," Stephen Innes of AxiCorp said in a commentary.
The prospect for progress in talks among oil producers was a big driver of Wednesday's rally, analysts said.
Oil prices have been even more volatile than stocks recently as Russia and Saudi Arabia bicker over production levels as demand withers. Oil producers are set to meet on Thursday, and an announcement for production cuts to prop up the price of crude is possible.
"The icing on the cake, ... a 'good' outcome for oil prices from the OPEC+ meeting, would be a global agreement to cut output ... beyond OPEC and Russia, although demand concerns will persist," Innes said.
Benchmark U.S. crude oil rose 82 cents to $25.92 per barrel in electronic trading on the New York Mercantile Exchange early Thursday. It gained $1.46, or 6.2%, to settle at $25.09 a barrel on Wednesday, recovering some of its 9.4% slide from the day before.
Brent crude oil, the international standard, rose 62 cents to $33.46 per barrel. It gained 97 cents, or 3%, to $32.84 a barrel in London.
In currency trading, the dollar fetched 108.91 Japanese yen, up from 108.84 yen on Wednesday. The euro sold for $1.0858, little changed from $1.0856.
Many analysts say they're skeptical of the recent stock rally given how much uncertainty still remains. The death toll continues to rise, millions of people are still losing their jobs by the week and the economic pain is worldwide.
But Dr. Anthony Fauci, the top U.S. infectious diseases expert, raised hopes when he said the White House is working on plans to eventually reopen the country. President Donald Trump later said it "will be sooner rather than later."
The S&P 500 climbed 3.4% to 2,749.98. The Dow Jones Industrial Average also rose 3.4%, to 23,433.57. The Nasdaq added 2.6% to 8,090.90.
Stocks that have been beaten down the most since the sell-off began in February helped lead the way, including energy companies, retailers and travel-related companies.
Shares of health insurers and other stocks got an extra boost after Bernie Sanders suspended his presidential campaign. Investors had been wary of Sanders' proposal of "Medicare For All" and other plans that could have restricted profits.
Treasury yields, which signaled worries about the economic damage from the coronavirus outbreak earlier than the stock market, were relatively steady. The yield on the 10-year Treasury was at 0.75%, from 0.76% late Wednesday.
Nearly 1.5 million cases of COVID-19 have been confirmed around the world, with more than 432,000 of them in the United States. More than 88,000 people have died from the virus, while nearly 330,000 have recovered, according to a tally by Johns Hopkins University.
Just as the coronavirus outbreak has boxed in society, it's also squeezed high-flying tech companies reliant on people's freedom to move around and get together.
Since the beginning of March, for instance, Uber shares have lost a quarter of their value. Rival Lyft is down 28 percent. Over the same period, the S&P 500 has fallen just 10 percent, even with wild swings along the way. The picture is even less clear for other, still-private "unicorn" companies once valued at more than $1 billion, such as Airbnb and WeWork.
"What market pressure will mean for all companies is survival of the fittest," said Allen Adamson, co-founder of the marketing firm Metaforce and a business professor at New York University. "If you are going into this storm in a bad shape, it's not going to be pretty."
Just few weeks ago, Airbnb was poised to cash in on a soaring stock market with its highly anticipated public offering. But with the market now reeling and few people looking to anywhere but home, Airbnb is reportedly racking up millions of dollars in losses while fending off a backlash from hosts who rely on its service to survive.
Hosts were furious when the company told guests they could cancel their stays without penalties. Last week, Airbnb agreed to pay hosts $250 million to make up for some of the money lost to cancellations.
AirDNA, a data firm that helps property owners set rental rates, says the impact on U.S. Airbnb hosts has been mixed. In New York City, bookings dropped 66% in March, but in outer suburbs they were up as people fled the city. Bookings in Westhampton Beach, N.Y., jumped sixfold. Similarly, bookings in the city of Chicago fell 11% last month, but in St. Joseph, Michigan — a lakeside community within driving distance — they were up by a factor of four.
Cary Gillenwater, who has an attached guest suite in Amsterdam listed on Airbnb, said 20 guests have canceled reservations between March and June, costing him nearly $11,000. He had hoped for compensation from the company, but was told that only reservations canceled through Airbnb that specifically mentioned the coronavirus would qualify. Several of his would-be guests contacted him directly to cancel; he refunded their money, but may be out of luck when it comes to reimbursement. Airbnb didn't immediately respond to a request for comment.
The company got a lifeline of sorts on Monday, when two private equity firms — Silver Lake and Sixth Street Partners — invested $1 billion in debt and equity in the company. The firms say the expect Airbnb to emerge from the crisis in a stronger position.
The Wall Street Journal reported on Tuesday, however, that the company will pay interest of more than 10% on those loans and that it has made a "verbal commitment" to reduce fixed costs and to bring in supplemental management — terms that often mean layoffs and other cost-cutting. Airbnb didn't immediately respond to a request for comment on the Journal report.
Uber, meanwhile, is trying to reassure jittery investors than its aggressive expansion plans for ride-hailing remain on track. Like its rival Lyft, it has seen ride demand hit a wall as states ratchet up stay-at-home orders. Both companies are trying to conserve cash so they can weather the pandemic's fallout, in part by emphasizing deliveries of food and other goods.
Even in its worst-case scenario -- an 80% decline in ridership through 2020 -- the company said it would end the year with $4 billion in cash. That would still mean burning through almost $7 billion this year, which could create problems for Uber's larger ambitions such as self-driving cars and air taxis.
Analysts, however, remain largely bullish. "We believe both Uber and Lyft will come out the other side still well placed to capture growth and opportunity," said Wedbush Securities analyst Daniel Ives.
Drivers are another story. San Diegan Christopher Chandler, who's been driving for both companies for two years, said he's lost more than 80% of his income since riders all but vanished. "I'm going to have to make some hard choices about what bills I won't pay this month," said Chandler, who has switched to deliveries that don't come close to covering his former ride income.
Other lesser-known companies, however, have benefited from the pandemic. Zoom, the video conferencing provider, has seen its stock soar to new highs in recent weeks; shares have nearly quadrupled compared to their IPO price just 11 months ago.
Not so long ago, the meal-kit maker Blue Apron was threatened with delisting from the New York Stock Exchange after its shares fell below the exchange minimum of $1. Since the beginning of March, however, company shares have more than tripled after it reported a sharp increase in consumer demand fueled by stay-at-home orders.
CB Insights lists more than 450 startups worldwide valued at $1 billion or more. While it can be hard to paint these unicorns with a broad brush because of their variety of business models and leadership styles, co-founder and CEO Anand Sanwal said that what COVID-19 is doing to the economy will be "tough for any company to weather, startup or not."
Sanwal said he's already seeing a decline in early-stage seed investments that help launch new tech startups. But he said investors who have poured big sums into unicorn startups will likely try to do what they can to help keep them healthy, at the very least by grooming them for sale rather than standing by as they collapse.
"Investors are going to make some hard decisions about whether this is a temporary downturn, or a company that doesn't have a shot," he said.
The outbreak of the coronavirus has dealt a shock to the global economy with unprecedented speed. Following are developments on Monday related to the global economy, the work place and the spread of the virus.
AIRLINES: The founder and top shareholder of European carrier easyJet says the company has enough money only to get through August at best and wants to cancel a 4.5 billion-pound ($5.5 billion) contract with planemaker Airbus for what he calls 107 "useless aircraft."
In a long statement to the media, Stelios Haji-Ioannou says that terminating the contract is the only way for shareholders to retain any value in their holdings in the company. EasyJet, which flies predominantly in Europe, has grounded all 344 planes and like other airlines is struggling mightily with the global lockdowns on business and travel.
European companies are expected to get financial support from the government, though unlike the U.S. there has not been a coordinated regional plan to bail out airlines or planemakers.
In the U.S., Delta Air Lines, American Airlines, United Airlines and JetBlue have said they applied Friday for their share of $25 billion in federal grants designed to cover airline payrolls for the next six months. None disclosed the amount they are seeking. The grant money was part of $2 trillion relief bill approved last week. Delta's CEO says his airline is burning more than $60 million cash per day, and United's president puts it at $100 million a day.
Singapore, meanwhile, said it will suspend its Changi Airport Terminal 2 for 18 months from May 1. The airlines in Terminal 2 will be reallocated across the remaining terminals.
Its Terminal 4 operations have also been scaled down considerably, and Changi Airport may consider suspending operations temporarily if the remaining airlines choose to suspend or adjust their flight schedules.
STIMULUS: Japanese Prime Minister Shinzo Abe is preparing to announce a 108 trillion yen ($1 trillion) economic package to help the country weather the coronavirus crisis. Abe said Monday he plans to disclose details of the package as early as Tuesday.
Japan, the world's third-biggest economy, was already in a contraction late last year before the virus outbreak walloped business and travel. The government has been slow to roll out containment measures, on a piecemeal basis, and only recently announced it would postpone the Tokyo 2020 Olympics by one year. But a surge in infections has prompted Abe and other leaders to discuss more stringent methods to contain the pandemic. Abe is expected to announce a state of emergency on Tuesday, at least for the hardest-hit big cities, such as Tokyo.
Japan's package amounts to about one-fifth of its economy and includes 6 trillion yen in ($55 billion) in cash benefits, loans to help protect jobs and extensions of deadlines for for taxes and social benefit payments.
Smartphone company Vivo has extended warranty of its smartphones until May 31, amid the coronavirus or COVID-19 outbreak.
The warranties of smartphones were scheduled to expire on March 25.
Vivo will provide hotline service from 9am to 6pm while its service centers will remain closed, said a press release.
Hotline numbers are- 01318563993 and 01318563995.
Customers will be also able to contact Vivo by its facebook page, website and email.