Second COVID wave slowing global oil demand, says IEA

Wells Fargo posts $2bn profit in Q3, reversing Q2 loss Demand on OPEC crude drops 7 mln barrels a day

PARIS, Oct 14, (KUNA): A second emerging wave of highly-contagious Covid-19 virus is slowing global oil demand after a timid recovery over summer period when lockdowns were ending and people began travelling for holidays in northern hemisphere, the International Energy Agency (IEA) said on Wednesday.

In its monthly Oil Market Report (OMR), the agency indicated that oil demand worldwide had risen 3.4 million barrels per day (mbd) from June to July as restrictions on movement and activity were lifted in many areas.

But this upward trend is gradually being reversed because of a resurgence of Covid-19 and the decision by governments to clamp down on a number of activities, thus slowing economies.

The IEA remarked that “a second wave of Covid-19 cases and new movement restrictions are now slowing demand growth.” It noted that increased demand from the summer period is likely to be wiped out for all of 2020. But the situation is still volatile and more restrictions that could curb demand may be put in place and more severe drops cannot be excluded. “Our 2020 forecast is unchanged at 91.7 mbd, down 8.4 mbd from 2019,” the Paris-based IEA indicated in its report.

“Our 2021 forecast is also largely unchanged at 97.2 mbd, showing a gain of 5.5 mbd from 2020.”

At the same time, global oil supply fell 600,000 bd to 91.1 mbd in September, 8.7 mbd lower than in the same month a year earlier. The IEA noted that the UAE had sharply reduced output and maintenance had cut back supply in the North Sea and Brazil, which more than offset a US rebound from August’s hurricane disruptions.

The OMR projected that world oil supply could move close to 92 mbd in the fourth quarter from an average of 91.3 mbd in the third quarter if Libyan production continues to increase and OPEC maintains targets. Total nonOPEC supply is set to drop by 2.6 mbd in 2020 before recovering by 0.4 mbd in 2021, the report said.

The IEA also noted that the refinery sector was witnessing “one of their worst quarters” ever because of steep falls in margins in the third quarter.

Meanwhile, OPEC said demand for its crude in 2020 has dropped by around 7 million a day to 22.4 million barrels a day compared with 2019 as a result of the COVID-19 pandemic.

Demand for OPEC crude in 2021 will be 27.9 mb/d, around 5.6 mb/d higher than in 2020, according to the cartel’s assesments.

“Spot crude prices settled significantly lower in September, after four consecutive months of gains,” it added.

“The OPEC Reference Basket (ORB) fell by USD 3.65, or 8.1 percent month-on-month, to $41.54 a barrel, while the year-to-date averaged $40.62 a barrel.”

SILVER SPRING, Maryland, Oct 14, (AP): Wells Fargo says it earned $2 billion in the third quarter, less than half of what it made in the same period last year but a significant improvement from this year’s second quarter, when it posted a loss as the coronavirus swept through the US. The San Francisco bank said Wednesday that it earned 42 cents per share, down from 92 cents per share a year earlier and less than the 44 cents Wall Street analysts were expecting.

Wells reported revenue of $18.86 billion in the quarter, also down from last year’s third quarter when it took in $22 billion. The bank’s revenue for the quarter surpassed Wall Street projections of $18 billion.

Wells set aside $769 million in the third quarter for loan loss provisions, which is the money set aside to cover potentially bad loans. That’s just a fraction of the billions it set aside in the previous quarter when the coronavirus shuttered the economy, forced millions of people out of work and jeopardized the ability of businesses and individuals to make loan and mortgage payments.

Wells Fargo lost $2.4 billion in the second quarter, the first quarterly loss for the bank since the real estate crash of 2008.

Wells Fargo said its net interest income was $9.4 billion, down $2.3 billion from last year’s period. Noninterest income of was $9.5 billion, down $891 million from 2019.

As the coronavirus outbreak persists in many areas of the U.S. and with a cold-weather resurgence possible in many others, many fear that potential business closures this fall and winter could throw the U.S. economy into a tailspin similar to last spring.

Charlie Scharf, Wells Fargo’s chief executive officer, acknowledged the boost his bank got from the government’s injection of trillions of dollars in loans and relief into the U.S. economy, giving consumers the power to spend and helping many businesses stay afloat.

But with another aid package stalled in Congress, the country’s economic future is cloudy.

“As we look forward, the trajectory of the economic recovery remains unclear as the negative impact of COVID continues and further fiscal stimulus is uncertain,” Scharf said. On top of the difficulties presented by the virus pandemic, Wells has been in seemingly constant trouble with regulators for years. The nation’s biggest mortgage lender, Wells has been operating under strict federal guidelines due to a series of scandals, limiting its ability to grow.

In 2018, the Fed capped the size of Wells Fargo’s assets beginning in 2016 with the uncovering of millions of fake checking accounts its employees opened to meet sales quotas. The Fed lifted that cap in April as part of the federal government’s Payroll Protection Program because many of Wells’ small business customers were getting shut out from applying.

Shares in the consumer bank fell about 2% in pre-market trading.

Meanwhile, consumer banking giant Bank of America says third-quarter profit declined 15.6% from a year earlier, but saw less need to put aside money to cover potentially bad loans, citing improvements in the U.S. economy.

BofA was the latest major bank, after JPMorgan Chase and Citigroup, to set aside fewer dollars to cover its loan-loss reserves, after the industry set aside tens of billions of dollars in the first months of the pandemic to account for loans - once perfectly good - that were now in trouble as millions of workers lost jobs and small businesses failed.

The North Carolina-based bank said Wednesday that it earned a profit of $4.88 billion, or 51 cents per share, down from a profit of $5.78 billion, or 56 cents per share, in the same period a year earlier. The results missed analysts’ estimates, who were looking for BofA to earn 53 cents a share, according to Zacks Investment Research.