August 05, 2020: With oil prices blasted by a double blow of oversupply and demand throttled by the coronavirus crisis, some industry giants are eyeing less polluting investments as bets on a less hydrocarbon-heavy future.
The world's top five oil firms -- BP, Chevron, ExxonMobil, Royal Dutch Shell and Total -- reported combined losses of $53 billion for the second quarter in recent days.
BP announced it would cut production by the equivalent of a million barrels of oil per day until 2030 as part of a plan to reach "net zero" greenhouse emissions by mid-century.
"If there was ever a moment to reset, this is it," said Luke Parker of energy consultancy Wood Mackenzie.
"Our view is that BP has taken the prudent course of action."
In recent months, producer countries have been slow to reduce the amount of oil flooding the market even as major consumers like the airline industry saw operations pared back to almost nothing.
In April, oil prices even fell into negative territory for the first time in history as traders scrambled to offload stock.
The impact has accelerated a strategic rethink for some oil companies.
Even before the pandemic struck they could see governments stepping up plans to reach net zero carbon dioxide (CO2) emissions in the fight against climate change.
- 'Stranded fossil assets' -
"If I were an investor in oil and gas, I would be worried that I would be putting my money in an outdated and risky industry," said Arthur van Benthem, an associate professor at Pennsylvania's Wharton Business School.
The fossil firms' results were not only undermined by reduced activity from the pandemic, but also massive write-downs in the value of their most precious assets - their as-yet untapped oil and gas reserves.
"These assets will either be less profitable when they come on line, or not be produced at all at the future prices now expected," said professor David Elmes of Warwick Business School.
By themselves, forecasts for low energy prices to persist into the coming years can't explain the sizes of the write-downs.
Rather, they are "part of a longer trend in which the rapid pace at which renewable energy is becoming competitive is putting traditional energy companies at risk," van Benthem said.
"Large investment companies, insurers, central banks, and others are warning the market about 'stranded fossil assets'... the renewable energy market seems a much safer bet."
As companies look to cut costs, new approvals for oil and gas projects could plunge by 75 percent this year, Rystad Energy analysts predict, rather than holding steady as previously expected.
- Output slashed -
The biggest oil companies "have the scale and money to change away from fossil fuels over time and face a stark choice on when to do so," Warwick professor Elmes said.
Alongside BP's cuts -- set to reduce its production by 40 percent of 2019 levels over the coming decade -- the London-based giant said it would multiply investments in renewable energies by 10 times over the same period.
"This coming decade is critical for the world in the fight against climate change, and to drive the necessary change in global energy systems will require action from everyone," chief executive Bernard Looney said.
Nevertheless, rating agency Standard and Poor's recalled that across the industry, "the proportion of public communications about greener strategies or renewable initiatives by these companies has not been matched by the share of non-oil and gas investment planned".
Renewable energy is likely to fall far short of the profit margins achievable with hydrocarbons, the credit analysts said.
"Overall, we expect oil and gas to remain the largest contributor to supermajors' cash generation for many years," they added.
August 05, 2020: Wall Street stocks opened higher Wednesday, extending a positive run on anticipation of more fiscal stimulus from Washington and progress on vaccines for the coronavirus pandemic.
About 30 minutes into trading, the Dow Jones Industrial Average was up 1.0 percent at 27,097.60.
The broad-based S&P 500 gained 0.6 percent to 3,325.52, while the tech-rich Nasdaq Composite Index climbed 0.3 percent to 10,978.77. The Nasdaq has ended at records the last two days.
The US added a disappointing 167,000 private sector jobs in July, much below the level of the last two months and suggesting the recovery has slowed, according to payrolls firm ADP.
Analysts expect a deal in Washington on another package of fiscal support for the coronavirus-battered US economy. Key lawmakers have signaled progress on the talks, but have yet to resolve partisan disagreements.
Sentiment was also boosted by signs of forward movement on vaccines.
Johnson & Johnson rose 1.0 percent after announcing it agreed to supply the US government with 100 million doses of a COVID-19 vaccine following regulatory approval in a $1 billion deal.
That announcement came after Novavax announced positive clinical results of another vaccine candidate, boosting shares by more than 18 percent.
Disney was another big gainer, climbing 9.3 percent despite reporting a $4.7 billion quarterly loss due to the coronavirus, which emptied theme parks and battered the live sports industry that feeds its ESPN telecasts.
However, investors focused on strong results at its Disney+ streaming service, which already has more than 100 million paid subscribers.
August 5, 2020 (MLN): The State Bank of Pakistan (SBP) announced the auction calendar for August – October 2020 in which it plans to raise Rs.3.59 trillion through the sale of Government Securities.
The amount maturing during the next three months is Rs.3.204 trillion showing a net borrowing by the government of Rs.385.40 billion.
The SBP plans to auction Rs.2.30 trillion in short term Market Treasury Bills (MTB), Rs.420 billion in Fixed Rate Pakistan Investment Bonds (PIBs), Rs.720 billion in Floating Rate PIBs (PIBFRR), Rs.90 billion in Variable Rental Rate GOP Ijara Sukuk and Rs.60 billion in Fixed Rental Rate GOP Ijara Sukuk.
The 3 Year Fixed Rate PIB will be a fresh issue with the coupon rate slashed from 9 to 7 percent, with the remaining 5, 10, 20 year PIBs being the re-opening of Sep 19, 2019 issue while the 15 year PIB will be re-opening of April 16, 2020.
The 3, 5 and 10 year Floating rate PIB’s will be the reopening of June 18, 2020 issue with the current coupon rate being set at 8.2670% for 3 year, 8.3070% for 5 year and 8.5170% for 10 years.
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Aug 05, 2020 (MLN): Pak Rupee's Real Effective Exchange Rate Index (REER) decreased by 4.3 percent in June 2020 to a provisional value of 93.02 from the revised value of 97.20 in May 2020.
According to data published by the State Bank of Pakistan (SBP), the REER index has increased by 2.24 percent compared to June 2019.
Similarly the Nominal Effective Exchange rate Index (NEER) decreased by 4.4 percent in June to a provisional value of 59.77 from the revised value of 62.52 in May. On a yearly basis, the NEER Index has decreased by 4.96 percent.
PKR closed June at 168.0506 against the USD showing a depreciation of 3.03 percent compared to its value in May 2020. However, Compared to June 2019 PKR has depreciated by by 5 percent.
REER is a measure of the value of a currency against a weighted average of several foreign currencies, a decrease in REER implies that exports have become cheaper while imports become more expensive therefore, this decrease indicates an increase in trade competitiveness.
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August 05, 2020: On Tuesday at Pakistan Mercantile Exchange Limited, PMEX Commodity Index closed with a gain of 67 points at 4,898-level. The traded value of Metals, Energy, and COTS/FX was recorded at PKR 11.150 billion and the number of lots traded was 17,618.
The major business was contributed by Gold amounting to PKR 6.549 billion, followed by Silver (PKR 1.615 billion), NSDQ 100 (PKR 897.264 million), Platinum (PKR 884.459 million), Currencies through COTS (PKR 474.325 million), Crude Oil (PKR 261.487 million), DJ (PKR 222.773 million), Natural Gas (PKR 184.323 million), SP500 (PKR 38.010 million) and Copper (PKR 23.302 million).
In agriculture commodities, one lot of Corn amounting to PKR 2.694 million was traded.