Oil prices slide further as energy demands erode.
Oil prices hit their lowest levels since 2002 on Monday as Brent crude, the international benchmark, fell nearly 6 percent to $23.50 a barrel and West Texas Intermediate, the U.S. marker, briefly fell below $20.
The sharp economic contraction caused by the spreading coronavirus epidemic is causing demand for oil, the world’s largest source of energy, to evaporate. The gloom deepened on Sunday as President Trump extended guidelines on social distancing and nonessential travel in the United States another two weeks until at least the end of April.
In addition, there is little sign that Saudi Arabia and Russia, two of the largest oil producers, are willing to end the price war that erupted after a failed OPEC meeting this month. The United States has been leaning on the Saudis to end the feud, which has resulted in an increase in oil production. But on Friday, Saudi Arabia issued an unusual statement saying that the kingdom was not engaged in talks with Russia “to balance oil markets.”
Analysts say that the collapse in demand caused by the pandemic far outweighs the threat of new supplies from OPEC and Russia. FGE, a consulting firm, recently estimated that demand for April would fall by 17 million barrels a day — about 17 percent lower than usual — as airplanes are grounded, road traffic falls sharply and factories are shuttered.
There are growing concerns that a surplus of oil and refined products may overwhelm available storage facilities. Analysts say the combination of low prices and lack of sufficient storage to hold the glut may lead companies to shut down wells.
Global markets open lower as investor worries persist.
Markets were broadly lower on Monday as investors remained nervous about global economic prospects despite stabilization efforts from governments.
London and Paris opened more than 2 percent lower, after a retreat earlier in the day in Asian markets. But futures markets suggested that Wall Street would open higher on Monday.
Other markets signaled continuing investor unease, including rising prices for U.S. government bonds and falling prices for oil.
Stocks in Japan ended 1.6 percent lower, after the Japanese government unveiled measures on Saturday to support the world’s third-largest economy. Prime Minister Shinzo Abe pledged to use tax cuts, cash handouts, interest-free loans and other measures to incite growth in a country where the economy was already shrinking at the end of last year.
Hong Kong’s Hang Seng Index was down 1.5 percent. In mainland China, the Shanghai Composite fell 0.9 percent. The Kospi index in South Korea was flat.
Bucking the regional trend, stocks in Australia and New Zealand were higher.
The United States tried to build ventilators years ago. It failed.
Public health officials have known for years that the United States lacked enough ventilators, making the nation vulnerable to a pandemic. The government sought to address the issue 13 years ago by building a fleet of inexpensive portable devices that could be used in a health crisis.
Despite a budget and federal contracts, the marketplace ultimately killed the effort. The small California company hired to design the ventilator was acquired by a multibillion-dollar conglomerate in 2012 as the medical device industry was undergoing rapid consolidation.
But government officials suspected that the acquiring company, Covidien, had bought the device maker to prevent the introduction of a cheaper machine that would undercut its existing ventilator business. After the takeover, executives said the project was insufficiently profitable and wanted to terminate the contract. The government acceded and in 2014 awarded the business to a Dutch company.
According to a spokeswoman at the department of Health and Human Services, the new ventilators are on their way. “We are expecting them soon,” she said.
As demand for protection soars, faulty products could enter the supply chain from China.
China’s vast manufacturing machine has moved into overdrive to supply the country and the world with masks, respirators and other equipment to fight the coronavirus pandemic. Chinese-made masks have been part of aid packages sent to Europe, developing countries and the United States, as China has tried to improve its public image after a disastrous attempt to play down its virus-related crisis in January.
But even as it encourages production, the Chinese government has also had to step up enforcement efforts to stop defective and uncertified products. That presents a challenge to officials who have to ensure that quality standards are met even as they push factories to make what the world needs.
One man made fake Honeywell N95 respirators at a makeshift factory on a farm. Pharmacies sold ineffective knockoffs of a Chinese version of Clorox. In one Chinese province, the authorities seized more than seven million masks that were substandard, mislabeled or counterfeited.
“Every time when something major happens in society like this virus outbreak, there is a lot of demand and different kinds of companies try to get in,” said Cody Zhang, the chief executive of a start-up seeking certification for its own products, including a disinfecting robot. “It becomes hard at the beginning to figure out which ones are good and which ones are bad.”
Instacart employees plan to strike on Monday.
Workers at Instacart, a tech business that delivers groceries and other goods ordered through its app, plan a nationwide strike Monday, arguing that they lack adequate virus protection.
The service, long popular in Silicon Valley, has exploded across the country as people are told to stay home to prevent further spread of the disease.
The company’s 200,000 delivery workers are independent contractors, and the app is not tied to any specific retailer. Instacart has agreements with more than 350 businesses, including Costco, CVS Pharmacy and Target.
But delivery workers say Instacart is “profiting astronomically off of us literally risking our lives, all while refusing to provide us with effective protection, meaningful pay and meaningful benefits.”
They’re demanding personal protection equipment, hazard pay of an extra $5 per order and at least 10 percent tip on each order total.
The race for virus money is on, and lobbyists are at the ready.
The federal government is open for coronavirus business, and the scramble to get some of it is on.
The list continues.
Across the country, companies see a chance to cash in, do some good for the country or both, making the virus outbreak response one of the few thriving sectors of the economy. And because so much of the business runs through Washington, the rush has created new opportunities for those who can offer access, influence and expertise in navigating bureaucratic hurdles and securing chunks of the relief package that Mr. Trump signed into law on Friday.
More U.S. jobs data this week will tally the economic damage.
The week ahead will bring some key economic data that will continue to paint a picture of the toll that the virus is taking on the American economy.
The jobs report from the Labor Department comes out Friday morning. It’s often a good indicator of the direction of the economy, though this month’s will offer an outdated snapshot because it will be based on surveys conducted before the nation’s business shutdown kicked into full gear.
The big headline jobs number is expected on Thursday, when the government will announce the number of people across the country who filed for initial unemployment benefits last week. In the week before, nearly 3.3 million claims were filed, a record by a long shot.
The week will also see the release of information about the American manufacturing sector, which most economists think is contracting again after briefly rebounding earlier this year.
Catch up: Here’s what else is happening.
American Media Inc., the publisher of The National Enquirer, Men’s Journal, Us Weekly and other titles, is cutting the pay of its employees more than 20 percent. It’s the latest instance of a media company trying to slim down. Last week, BuzzFeed announced temporary payroll cuts.
Americans are stress-buying all of the baby chickens.
The Australian government announced a wage subsidy plan on Monday that will pay businesses roughly 70 percent of the median wage to prevent millions of workers from losing their jobs because of the coronavirus outbreak.
Reporting was contributed by Stanley Reed, Kenneth P. Vogel, Alexandra Stevenson, Tiffany May, Derrick Bryson Taylor, Damien Cave, Edmund Lee, Marc Tracy, Nicholas Kulish, Sarah Kliff, Jessica Silver-Greenberg, Daniel Victor and Carlos Tejada.