U.S. Crude Oil Prices Go Negative

The latest in COVID-19

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U.S. Crude Oil Prices Go Negative

Quick Take

  • U.S. crude oil hits a record -$37.63 a barrel.
  • U.S. Senate reaches a $484 billion coronavirus relief deal including funding for small businesses.
  • A team at Oxford begins trials of a potential coronavirus vaccine this week.
  • The Netherlands cancels public gatherings until Sept. 1st but opens elementary schools next month. 

There are now more than 2.5 million global confirmed coronavirus cases with deaths topping 180k. Fatalities in the U.S. are more than 45k.

Oil Price Drops Below $0 For First Time

U.S  oil prices have plunged to below zero for the first time in history. The price for a barrel of U.S. crude oil has hit a rock bottom -$37.63, meaning producers were paying buyers to take oil off their hands as there is no more room to store it.

Demand for oil collapsed amid the coronavirus pandemic as most of the world still remains under lockdown. Oil is currently going to refineries that do not need it. Saudi Arabia is delivering an average of 600,000 barrels a day to the U.S. this month. President Trump says he is considering whether to stop incoming oil shipments from Saudi Arabia.

The near-term outlook on oil remains concerning as it is heavily relying on the re-opening of the economy. Even with OPEC+ reaching a historic agreement to cut production by 9.7 million barrels per day beginning May 1st, experts say that still won’t be enough to counter the fall in demand.

Paycheck Protection Program To Be Extended

The U.S. Senate has reached a $484 billion coronavirus relief agreement that includes funding for small businesses and hospitals. 

The bill would allocate an additional $320 billion for the Paycheck Protection Program, which ran out of funding last week.  $60 billion of that would be set aside for small lenders. The program offers small businesses with forgivable loans if they keep people employed through September. Another $60 billion would go to the Economic Injury Disaster Loan program.

The bill grants $75 billion for hospitals and $25 billion for coronavirus testing. Out of the testing funding, $11 billion would go to states. The Senate hopes to pass the bill this afternoon and send it to the House. 

World Hunger Could Double This Year

According to a new report from the World Food Program, the number of people facing acute hunger this year could double due to coronavirus. About 265 million people in low- and middle-income nations could face starvation by the end of 2020, a doubling from the current 135 million. Across the world, lockdowns and social distancing measures aimed at curbing the spread of the virus have also affected agricultural production, food security, and levels of nutrition.

Arif Husain, the chief economist with the World Food Program, says that unless much-needed food and humanitarian aid is delivered to those in need, the virus and the response could prove catastrophic for millions already hanging by a thread. The United Nations said on Monday that global donors had only pledged a quarter of the $2 billion it needs to respond to the challenges brought by the pandemic.

Oxford Vaccine Trials Begin This Week

A team at Oxford will begin trials of a potential coronavirus vaccine this week. Britain’s health secretary, Matt Hancock announced the news with the government making £20m available to Oxford University to accelerate its work. Hancock said at a news conference that a successful outcome was far from guaranteed because vaccine development was generally a matter of trial and error, but added that it would normally have taken two years to get to this point in the work cycle.

He also announced funding to support vaccine development at Imperial College, London, and said the government would invest in expanding manufacturing capacity to produce any successful vaccine on a large scale.

Sarah Gilbert, a professor of vaccinology at Oxford University, is hoping for 500 people to be part of the trial by the middle of May. The trials will involve healthy volunteers and take place in Oxford and Southampton, with three other sites to be added later.

Netherlands Cancels Public Gatherings Until Sep/ 1st

The Netherlands has canceled public gatherings, including the professional soccer league’s games, until Sept. 1st, but elementary students will be able to return to school next month. The prime minister said he had struggled with the decisions, calling it a diabolical dilemma, concluding that opening up the country further is scary and dangerous.

Elementary students will return to school on May 11th during alternating days, to let them stay farther apart. The Netherlands, which has a population smaller than the state of New York, has had more than 3,900 coronavirus deaths, giving it one of the highest official death rates.