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Asian markets tread cautiously ahead of U.S. stimulus, jobs

SINGAPORE (Reuters) – Asian stock markets made a cautious start on Thursday following two days of rallies, as investors await the passage and details of a $2 trillion stimulus package in the United States to combat the economic fallout from the coronavirus.

Senate leaders hope to vote on the plan later on Wednesday in Washington, but it still faces criticism. The bill includes a $500 billion fund to help hard-hit industries and a comparable amount for payments up to $3,000 to millions of U.S. families.

It cannot come soon enough, with potentially enormous weekly U.S. initial jobless claims to appear in data due at 1230 GMT.

Australia’s S&P/ASX 200 index rose 1.5% in early trade – its third positive start in as many sessions, but also its most muted. Japan’s Nikkei fell 2.2%.

Hong Kong futures were 1% higher and China A50 futures were up 0.2%. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3%.

“There has been so much stimulus thrown at this,” said Jun Bei Liu, portfolio manager at Tribeca Investment Partners in Sydney.

“But the positivity related to it is really just sentiment,” she said, adding that investors were largely flying blind with so many companies withdrawing earnings guidance. Jobless figures may offer a “reality check,” she said.

In perhaps an early sign of the fragile mood, the risk-sensitive Australian dollar dropped 1% and the safe-haven Japanese yen rose in morning trade. [FRX/]

U.S. stock futures rose 1%, following the first back-to-back session rises on Wall Street in over a month.

The Dow Jones Industrial Average rose 2.4% and the S&P 500 1.2%, while the Nasdaq Composite dropped half a percent following a Nikkei report that Apple was weighing a delay in the launch of its 5G iPhone.

JOBLESS CLAIMS TO TEST BOUNCE

The money at stake in the stimulus bill amounts to nearly half of the $4.7 trillion the U.S. government spends annually.

But it also comes against a backdrop of bad news as the coronavirus spreads and as jobless claims are set to soar, with both expected to test the nascent bounce in markets this week.

California Governor Gavin Newsom told reporters on Wednesday that a million Californians had already applied for jobless benefits this month – a number that knocked stocks from session highs and has analysts bracing for worse to come.

RBC Capital Markets economists had expected a national figure over 1 million in Thursday’s data, but say “it is now poised to be many multiples of that,” as reduced hours across the country drive deep layoffs.

“Something in the 5-10 million range for initial jobless claims is quite likely,” they wrote in a note.

That compares to a 695,000 peak in 1982. Forecasts in a Reuters poll range from a minimum of 250,000 initial claims, all the way up to 4 million.

Trepidation seemed to put a halt on the U.S. dollar’s recent softness in currency markets, with the dollar ahead 1% against the Antipodean currencies and up 0.6% against the pound.

It slipped 0.3% to 110.85 yen.

U.S. crude slipped 1.5% to $24.11 per barrel and gold steadied at $1,608.14 per ounce.

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GLOBAL MARKETS-Stocks rebound further as markets await $2 trillion U.S. stimulus boost

(Adds oil settlement prices, details)

* MSCI world index adds to biggest climb since 2008 crisis

* Wall Street also on track for back-to-back gains

* Gold retain most of advance after big jump

* Dollar slips as markets wait for U.S. stimulus package

* Graphic: World FX rates in 2020 tmsnrt.rs/2egbfVh

By Herbert Lash and Marc Jones

NEW YORK/LONDON, March 25 (Reuters) – The dollar slid and global equity markets marched higher on Wednesday, poised for a second day of gains on optimism $2 trillion in U.S. fiscal stimulus will dampen the economic shock the coronavirus pandemic already has started to inflict.

U.S. senators will vote Wednesday. Top aides to Republican President Donald Trump and senior Republican and Democrat senators agreed on the unprecedented bill after five days of marathon talks.

Hopes the bill, which is nearly half the $4.7 trillion the U.S. government spends annually, will ease an expected recession lifted world stock indexes for back-to-back gains for the first time since markets sold off a month ago.

Europe’s main markets in London, Frankfurt and Paris were struggling to stay positive after ripping 4%-5% higher and oil prices swung from 3% up to 3% down. Wall Street also teetered though it mostly remained more than 1% higher.

The Dow Jones Industrial Average soared more than 11% on Tuesday in its biggest single-day percentage gain since 1933 and the benchmark S&P 500 jumped 9.4% – its tenth best day on record out of 24,067 trading sessions since a daily data series started in 1927.

The stimulus package marks progress but the devil’s in the details, said Ron Temple, head of U.S. equity at Lazard Asset Management in New York. The legislation is not available to read to know how it will be executed or when money arrives at households and small businesses gain access to funding, he said.

“This is not the all-clear; it’s just material progress,” Temple said.

“Until we know we can go back to work safely, that we can go to restaurants and go to stores and engage with other humans in close proximity, I don’t think you can make an economic or a market call. It’s premature to be trying to call the bottom.”

The stimulus includes a $500 billion fund to help hard-hit industries and a comparable amount for direct payments of up to $3,000 apiece to millions of U.S. families.

It will also include $350 billion for small-business loans, $250 billion for expanded unemployment aid and at least $100 billion for hospitals and related health systems.

Countries that have locked down their populations to prevent the spread of the coronavirus need to use the time to find and attack the virus, the World Health Organization said.

As the United States works to screen thousands for the coronavirus, a new blood test offers the chance to find out who may have immunity – a potential game changer in the battle to contain infections and get the economy back on track.

Over 450,000 people have been infected globally and more than 20,000 have died, according to a Reuters tally.

Data on Wednesday pointed to a fast-slowing economy that analysts said signaled the United States already is in recession.

New orders for key U.S.-made capital goods fell sharply in February as demand for machinery and other products slumped, suggesting a deepening contraction in business investment.

The benchmark S&P 500 is still nearly $8 trillion below its mid-February high, and investors expect more sharp swings. Wall Street’s fear gauge eased overnight but was on the rise again ahead of Wednesday’s open.

MSCI’s gauge of stocks across the globe surged 2.65% and emerging market stocks rose 4.32%.

The pan-European STOXX 600 index rose 0.96%.

The Dow Jones Industrial Average rose 661.9 points, or 3.2%, to 21,366.81. The S&P 500 gained 35.76 points, or 1.46%, to 2,483.09 and the Nasdaq Composite added 34.47 points, or 0.46%, to 7,452.33.

In the currency markets, the dollar slipped for a third straight session as a scramble for liquidity was soothed by the super-sized U.S. stimulus plan, though it was starting to look a little stronger again.

The dollar index fell 0.216%, with the euro up 0.44% to $1.0834. The Japanese yen weakened 0.24% versus the greenback at 111.51 per dollar.

The risk-sensitive Australian dollar jumped over the 60-U.S. cent mark for the first time in a week.

Bond markets were also calmer. Benchmark U.S. Treasuries were yielding 0.7987% while in Europe Germany’s 10-year yield edged a basis point higher to -0.296%, tailed by other higher-rated government debt.,

European Central Bank chief Christine Lagarde asked euro zone finance ministers during a videoconference on Tuesday to seriously consider a one-off joint debt issue of “coronabonds”, officials told Reuters.

In metals markets, gold changed hands at $1,608.78 an ounce , retaining most of Tuesday’s gains of almost 5%, its biggest jump since 2008.

U.S. crude prices rose slightly, bolstered by progress on a massive pending U.S. economic stimulus package.

Brent crude gained 24 cents to settle at $27.39 a barrel. U.S. crude futures rose 48 cents to settle at $24.49 a barrel.

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Asian shares track Wall Street surge as U.S. stimulus hopes grow

TOKYO (Reuters) – Asian shares extended their rally on Wednesday in the wake of Wall Street’s big gains as U.S. Congress appeared closer to passing a $2 trillion stimulus package to curb the coronavirus pandemic’s economic toll.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 1.3% with Australian shares rising 4.5% and South Korean shares .KS11 gaining 4.0%. Japan’s Nikkei .N225 added 2.0%.

“Japanese shares have been bolstered by aggressive buying from the Bank of Japan and pension money this week. That has prompted hedge funds to cover their short positions,” said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.

On Tuesday, MSCI’s gauge of stocks across the globe .MIWD00000PUS gained 8.39%, the largest single-day gain since the wild swings seen during the height of the global financial crisis in October 2008.

On Wall Street, the Dow Jones Industrial Average .DJI soared 11.37%, its biggest one-day percentage gain since 1933.

U.S. stock futures EScv1 were down 0.5% in early Asian trade.

Senior Democrats and Republicans in the divided U.S. Congress said on Tuesday they were close to a deal on a $2 trillion stimulus package to limit the coronavirus pandemic’s economic toll. But it was unclear when they would be ready to vote on a bill.

Investor fears about a sharp economic downturn are easing after the U.S. Federal Reserve’s offer of unlimited bond-buying and programs to buy corporate debt.

In the currency market, the dollar has slipped as a greenback liquidity crunch loosened slightly.

The euro traded at $1.0798 EUR= after four straight days of gains.

The dollar stayed firmer against the yen due to dollar demands at the March 31 end of the Japanese financial, trading at 111.33 yen JPY=, near a one-month high of 111.715 touched the previous day.

Gold soared almost 5%, its biggest gains since 2008, on Tuesday and last stood at $1,633 XAU=, in part helped by concerns lockdowns in major producer South Africa could disrupt supply.

Still, the course of the market is still largely dependent on how much countries can slow the pandemic and how quickly they can lift various curbs on economic activity.

Confirmed cases are now topping 400,000 globally with New York City suffering another quick and brutal rise in the number of infections to around 15,000.

Oil prices steadied as hopes for U.S. stimulus offset fears from falling global demand.

India, the world’s third largest oil consumer, ordered its 1.3 billion residents to stay home for three weeks, the latest big fuel user to announce restrictions on social movement, which have destroyed demand for gasoline and jet fuel worldwide.

The market remained pressured by a flood of supply after Saudi Arabia started a price war earlier this month, a move that dealt a crushing blow to markets already reeling from the epidemic.

U.S crude futures CLc1 rose 1.8% to $24.45 per barrel.

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U.S. kicks off new drilling lease sales despite oil market slump

(Reuters) – The Trump administration moved ahead with oil and gas lease sales in four Western states on Tuesday, bucking criticism from taxpayer advocates who say the auctions should be postponed because of a meltdown in energy prices.

The Bureau of Land Management (BLM) is offering more than 210,000 acres (85,000 hectares) for leasing via online auctions in Wyoming, Nevada and Montana on Tuesday, and Colorado on Thursday.

The largest sale is for 105 parcels covering 118,292 acres (47,871 hectares) in Wyoming, the top U.S. state for gas production on federal lands and the second-biggest for oil production, according to the U.S. Energy Information Administration.

In Nevada, BLM is offering 45 parcels covering 70,110 acres (28,372 hectares) and in Montana it auctioned eight parcels covering 5,180 acres (2,100 hectares). All eight parcels had sold in Montana by mid-morning on Tuesday, three for the minimum price of $2 an acre (0.4 hectare) and four others for under $10 an acre. The highest price was $102-an-acre for a parcel in Richland County, according to online marketplace EnergyNet.

In Colorado, BLM will offer 20 parcels on 18,960 acres (7,670 hectares).

Drilling on federal lands is a crucial part of President Donald Trump’s “energy dominance” agenda to maximize domestic production of fossil fuels. But the industry is in crisis as countries including the United States take unprecedented steps to contain the coronavirus pandemic that has curbed demand for products such as gasoline and jet fuel.

U.S. oil prices have dropped roughly half since the middle of February to about $24 a barrel.

Last week, the United States held an auction for oil and gas leases in the Gulf of Mexico that generated the lowest total of high bids for any domestic offshore auction since 2016. Earlier this month, BLM held a lease sale in Utah that received mostly minimum bids of $2 an acre.

“In this environment, it is impossible for the American taxpayer to expect anywhere near a fair return on oil and gas leases,” Taxpayers for Common Sense, a federal budget watchdog organization, and Conservatives for Responsible Stewardship, a non-profit conservation group, said in a joint statement last week.

In a statement, BLM spokesman Derrick Henry said the agency was not postponing lease sales.

“Using an all-of-the-above approach to energy development, we are helping to meet our nation’s growing energy needs by facilitating development and letting free market forces work after the resource is extracted by companies who sell these commodities. Oil and gas lease sales and royalties continue to propel America’s economy and support good-paying energy sector jobs.”

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March forex daily turnover hits $2.3 trillion as virus fuels volatility: CLS

LONDON (Reuters) – The meltdown in financial markets over the coronavirus has sparked a huge jump in foreign exchange trading volumes, with average daily turnover so far in March up 27% on February as volatility soared, CLS said on Tuesday.

CLS, a major settler of trades in the foreign exchange market, said in a statement that high average daily volumes seen at the end of February had continued into March, with spot volumes rising by more than 50%.

So far in March, average daily turnover has hit $2.3 trillion, CLS said. That compares with $1.8 trillion in February and $1.86 trillion in March 2019.

CLS said February saw record daily volumes in trading of the Korean won, the Singapore dollar and the Israeli shekel.

March has seen forex market volatility soaring to multi-year highs as investors panicked over the economic impact of the coronavirus.

The Deutsche Bank Currency Volatility Index .DBCVIX rose to more than 16% last week, having traded near record lows of below 5% in early February.

Major currency pairs such as dollar/yen and sterling/dollar have regularly seen daily moves of more than 1%, while currencies such as the Australian dollar and Norwegian crown have seen dramatic, multi-percent tumbles.

Many emerging market currencies have sunk to record lows as investors scrambled to buy dollars, the currency of choice for money managers and companies in a major economic crisis.

Traders say reduced liquidity has also been a problem, exacerbating the volatility in forex markets that has caught so many investors off guard.

CLS’s Head of Information Services Masami Johnstone said the jump in March volumes included a rise of 55% in spot trading, 15% in FX swaps and 36% in forwards.

“This was against the backdrop of the increased market volatility,” she said in the statement.

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FX daily turnover tops $2.3 trln in March as virus sparks volatility surge – CLS

LONDON, March 24 (Reuters) – The meltdown in financial markets over the coronavirus has sparked a jump in foreign exchange trading volumes, with average daily turnover so far in March up 27% on February’s numbers as volatility soared, CLS said on Tuesday.

CLS, a major settler of trades in the foreign exchange market, said in a statement that high average daily volumes seen at the end of February had continued into March, with spot volumes in particular surging.

So far in March, average daily turnover has hit $2.3 trillion, CLS said. That compares with $1.8 trillion in February and $1.86 trillion in March 2019.

March has seen forex market volatility soaring to multi-year highs as investors panicked over the economic impact of the coronavirus. (Reporting by Tommy Reggiori Wilkes)

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UPDATE 1-March FX daily turnover hits $2.3 trln as virus fuels volatility – CLS

(Adds details, context, quote)

LONDON, March 24 (Reuters) – The meltdown in financial markets over the coronavirus has sparked a huge jump in foreign exchange trading volumes, with average daily turnover so far in March up 27% on February as volatility soared, CLS said on Tuesday.

CLS, a major settler of trades in the foreign exchange market, said in a statement that high average daily volumes seen at the end of February had continued into March, with spot volumes rising by more than 50%.

So far in March, average daily turnover has hit $2.3 trillion, CLS said. That compares with $1.8 trillion in February and $1.86 trillion in March 2019.

CLS said February saw record daily volumes in trading of the Korean won, the Singapore dollar and the Israeli shekel.

March has seen forex market volatility soaring to multi-year highs as investors panicked over the economic impact of the coronavirus.

The Deutsche Bank Currency Volatility Index rose to more than 16% last week, having traded near record lows of below 5% in early February.

Major currency pairs such as dollar/yen and sterling/dollar have regularly seen daily moves of more than 1%, while currencies such as the Australian dollar and Norwegian crown have seen dramatic, multi-percent tumbles.

Many emerging market currencies have sunk to record lows as investors scrambled to buy dollars, the currency of choice for money managers and companies in a major economic crisis.

Traders say reduced liquidity has also been a problem, exacerbating the volatility in forex markets that has caught so many investors off guard.

CLS’s Head of Information Services Masami Johnstone said the jump in March volumes included a rise of 55% in spot trading, 15% in FX swaps and 36% in forwards.

“This was against the backdrop of the increased market volatility,” she said in the statement. (Reporting by Tommy Reggiori Wilkes; Editing by Jan Harvey)

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GLOBAL MARKETS-Asia stocks rally, Fed launches limitless QE against economic reality

* Asian stock markets : tmsnrt.rs/2zpUAr4

* S&P 500 futures bounce in Asia, Nikkei jumps

* Investors relieved as Fed pledge eases bond market stress

* Treasury yields fall, drag down yields globally

* Dollar off its peaks, supported by liquidity flows

By Wayne Cole

SYDNEY, March 24 (Reuters) – Asian stocks rallied on Tuesday as the U.S. Federal Reserve’s sweeping pledge to spend whatever it took to stabilise the financial system eased debt market pressures, even if it could not offset the immediate economic hit of the coronavirus.

While Wall Street seemed unimpressed, investors in Asia were encouraged enough to lift E-Mini futures for the S&P 500 by 1.9% and Japan’s Nikkei by 4.9%.

MSCI’s broadest index of Asia-Pacific shares outside Japan added 1.2%, though that followed a drop of almost 6% on Monday. South Korea and Australia also recouped a little of their recent losses.

In its latest drastic step, the Fed offered to buy unlimited amounts of assets to steady markets and expanded its mandate to corporate and muni bonds.

The numbers were certainly large, with analysts estimating the package could make $4 trillion or more in loans to non-financial firms.

“This open-ended and massively stepped-up programme of QE is a very clear signal that the Fed will do all that is needed to maintain the integrity and liquidity of the Treasury market, key asset-backed markets and other core markets,” said David de Garis, a director of economics at NAB.

“COVID-19 developments remain the wild card, as is the development of government policies to support cash flow and the economy.”

The Fed’s package helped calm nerves in bond markets where yields on two-year Treasuries hit their lowest sine 2013, while 10-year yields dropped back sharply to 0.77%.

Yet analysts fear it will do little to offset the near-term economic damage done by mass lockdowns and layoffs.

Speculation is mounting data due on Thursday will show U.S. jobless claims rose an eye-watering 1 million last week, with forecasts ranging as high as 4 million.

Goldman Sachs warned the U.S. economic growth could contract by 24% in the second quarter, two-and-a-half times as large as the previous postwar record.

A range of flash surveys on European and U.S. manufacturing for March are due later on Tuesday and are expected to show deep declines into recessionary territory.

While governments around the globe are launching ever-larger fiscal stimulus packages, the latest U.S. effort remains stalled in the Senate as Democrats said it contained too little money for hospitals and not enough limits on funds for big business.

The logjam combined with the stimulus splash from the Fed to take a little of the shine off the U.S. dollar, though it remains in demand as a global store of liquidity.

“The special role of the USD in the world’s financial system – it is used globally in a range of transactions such as commodity pricing, bond issuance and international bank lending – means USD liquidity is at a premium,” said CBA economist Joseph Capurso.

“While liquidity is an issue, the USD will remain strong.”

The dollar eased just a touch on the yen to 110.90 after hitting a one-month top at 111.59 on Monday, while the euro inched up to $1.0754 from a three-year trough of $1.0635.

The dollar index stood at 102.120, off a three-year peak of 102.99.

Gold surged in the wake of the Fed’s promise of yet more cheap money, and was last at $1,564.51 per ounce having rallied from a low of $1,484.65 on Monday.

Oil prices also bounced after recent savage losses, with U.S. crude up 64 cents at $24.00 barrel. Brent crude firmed 53 cents to $27.56.

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Rout resumes as more nations self-isolate against virus

LONDON/SYDNEY/HONG KONG (Reuters) – Financial markets around the world took another hammering on Monday as a rising tide of national coronavirus lockdowns threatened to overwhelm policymakers’ frantic efforts to cushion what is likely to be a deep global recession.

European stocks dived 4.5% as they reopened and commodity markets also saw more heavy selling as the global death toll from the virus passed 14,000.

Investors tried to take cover in ultra-safe government bonds and in the Japanese yen in currency markets but with so much uncertainty about when any semblance of normality might return there were few places to really hide.

“Further deterioration in the COVID-19 outbreak is severely damaging the global economy,” Morgan Stanley analysts warned on Monday. “We expect global growth to dip close to GFC (global financial crisis) lows, and U.S. growth to a 74-year low in 2020.”

Goldman Sachs sent a similar warning and in a taste of the pain to come, E-Mini futures for the S&P 500 dived 3.5% [.N] and MSCI’s main world stocks index was down 1.6% and almost at 4-year lows.

UBS Australian head of equities distribution George Kanaan said global financial markets were gripped by fear, which seemed unlikely to ease any time soon, despite the co-ordinated efforts of governments and central banks around the world.

“I have been in the financial markets for 27 years and I have never seen anything like this,” he told Reuters by telephone from Sydney.

“This is unprecedented in terms of fears and there are two elements driving that.

“First is that this involves masses of people. In the GFC, that was an event that occurred in the investment banks around the world, it didn’t involve people on the street. The second is that social media is helping to drive this fear and panic.”

In Asian trade, MSCI’s broadest index of Asia-Pacific shares outside Japan lost 5.4%, with New Zealand’s market shedding a record 10% at one point as the government closed all non-essential businesses.

Shanghai blue chips dropped 3.3%, though Japan’s Nikkei rose 2.0% aided by expectations of more aggressive asset buying by the Bank of Japan. In Australia, the S&P/ASX200 dropped 5.62% to take the index to a seven-year low.

Globally, analysts are dreading data on weekly U.S. jobless claims due on Thursday amid forecasts they could balloon by 750,000, and possibly by more than a million.

U.S. stocks have fallen more than 30% from their mid-February peak and even the safest areas of the bond market are experiencing liquidity stress as distressed funds are forced to sell good assets to cover positions gone bad.

In contrast to the response by authorities to the global health crisis, however, are calls from some on Wall Street to ease restrictions as soon as possible to give the economy room to recover.

“Extreme measures to flatten the virus ‘curve’ is sensible-for a time-to stretch out the strain on health infrastructure,” former Goldman Sachs Chief Executive Lloyd Blankfein tweeted.

“But crushing the economy, jobs and morale is also a health issue-and beyond. Within a very few weeks let those with a lower risk to the disease return to work.”

MOUNTING ECONOMIC TOLL

The mounting economic toll led to a major rally in sovereign bonds late last week, with efforts by central banks to restore liquidity in the market allowing for more two-way trade.

Yields on the benchmark U.S. 10-year note were down at 0.80%, having dived all the way to 0.84% on Friday from a top of 1.28%. European benchmarks like German Bunds were at around -0.36% down more than 20 bps from last week’s 10-month highs.

Calls were continuing for the euro zone’s 19 governments to issue the bloc’s first joint bonds to try to get the region through the economic crush of the virus lockdowns.

In New Zealand, the central bank announced its first outright purchase of government paper aiming to inject much-needed liquidity into the local market.

In currency markets, the first instinct on Monday was to dump those leveraged to global growth and commodity prices, sending the Australian dollar down 0.8% to $0.5749.

The U.S. dollar started firm but took a step back after partisan battles in the U.S. Senate stopped a coronavirus response bill from advancing.

The dollar eased 0.5% to 110.31 yen while the euro recouped losses to be up 0.1% at $1.0705.

The dollar had been a major gainer last week as investors fled to the liquidity of the world’s reserve currency, while some funds, companies and countries desperately sought more cash to cover their dollar borrowings.

The steady rise in the dollar undermined gold, which slipped 0.3% to $1,493.83 per ounce.

Oil prices were sharply lower. Brent crude futures dropped $1.30, or 4.9%, to $25.66 a barrel, while U.S. crude was down 29 cent to $22.34.

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U.S. to send envoy to Saudi Arabia; Texas suggests oil output cuts

WASHINGTON/HOUSTON (Reuters) – The Trump administration plans to send a special energy envoy to Saudi Arabia to work with the kingdom on stabilizing the global oil market, officials said on Friday, as the U.S. scrambles to deal with a price crash so deep that regulators in Texas considered curbing production there for the first time in nearly 50 years.

Oil prices LCOc1CLc1 have lost more than half their value in the last two weeks as Saudi Arabia and Russia kicked off a price war and the coronavirus pandemic destroyed demand. U.S. oil now trades at less than $23 a barrel.

The crash has shocked the oil industry as a pact among OPEC and non-OPEC producers to cooperate imploded, triggering a production free-for-all.

The United States is sending a special representative to negotiate with Saudi Arabia, officials said Friday, after the kingdom unleashed production following years of touting its role as a stabilizing force for markets.

Saudi Arabia and Russia are locked in a war for global oil market share after their three-year deal to restrain output collapsed this month. The kingdom has vowed to increase production to a record 12.3 million barrels per day, and has chartered numerous tankers to ship oil around the world, pushing prices to near 20-year lows this week.

U.S. officials believe Saudi Arabia’s move to flood oil markets compounds the global economic crash during a crisis caused by the pandemic.

A senior Energy Department official will be sent to Riyadh for months at least to work closely with State Department officials and the existing energy attache, the senior U.S. officials said, on condition of anonymity.

Trump administration officials said Saudi Arabia has for decades been a steadfast leader of stability in the global oil market. The energy representative would help the countries return to a path of stability, they said.

The price crash is also devastating to U.S. oil producers, some of which have already begun putting employees on furlough.

The hope is that President Donald Trump could negotiate with Saudi Arabia and Russia and convince them to match cuts with a similar cut in production in Texas, said Ryan Sitton, a commissioner with the Texas Railroad Commission, the body that regulates the state’s oil and gas industry.

Sitton said production limits could be implemented quickly, though no one who works at the agency was around the last time the state limited production, in the early 1970s.

“We need to take the time to hear from everybody,” he said, adding that he was not yet advocating for the cuts. But “if we can help (Trump) get a deal done, then I think that’s when we do something.”

Sitton said on Twitter that he spoke with OPEC Secretary General Mohammad Barkindo about an international deal “to ensure economic stability as we recover from” the coronavirus outbreak. Sitton said Barkindo was “kind enough to invite me to the next OPEC meeting in June.”

Barkindo told Reuters that he and Sitton discussed their “perspective on current developments, and the possibility of future cooperation” in a teleconference. Barkindo and OPEC ministers have, in the past, met with shale-industry executives at annual conferences.

A senior State Department official said the federal government does not have the ability to restrict the Texas regulator from any work with OPEC to cut production.

“Those are wholly within state matters … from a federal level we have no ongoing engagements with OPEC, it’s a cartel,” the official told reporters in a teleconference.

U.S. INDUSTRY UNMOVED

Some U.S. industry representatives were skeptical that Texas should intervene in the market. U.S. oil producers have long resisted such a move, and the industry’s largest trade association did not sound convinced on Friday, either.

“Our view is simple. Quotas are bad,” said Frank Macchiarola, senior vice president of policy, economics and regulatory affairs at the American Petroleum Institute. “They’ve been proven ineffective and harmful. There’s no reason during this time to try to imitate OPEC.”

In the last several years, shale operators using the innovative hydraulic fracturing, or fracking, technique, have boosted U.S. oil output to nearly 13 million barrels per day, making it the world’s largest producer. Since 2016, as OPEC restrained production, the United States has taken market share from Saudi Arabia, Russia and other nations.

Russia has been slower to come on board with OPEC’s continued efforts to bolster prices, and the country’s largest oil producer, Rosneft (ROSN.MM), has been an opponent of the deal with OPEC to cut supply. Units of Rosneft, and its managers, were recently sanctioned by the United States due to its trade relationship with Venezuela.

Trump administration officials will continue to reduce global oil output with sanctions on what the officials called bad actors in Iran and Venezuela, both of which are OPEC members, and their shipping networks, the officials said. To the extent that Russia is involved in marketing Venezuelan oil, it will be sanctioned, the officials said.

A group of nine Republican U.S. Senators, mainly from oil producing states, urged Commerce Secretary Wilbur Ross late on Friday to investigate whether Saudi Arabia and Russia were excessively dumping oil on global markets.

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