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| U.S. Oil Prices Plunge Into Negative Territory: Live Markets Updates | U.S. Oil Prices Plunge Into Negative Territory: Live Markets Updates |
| (32 minutes later) | |
| Something bizarre happened in the markets on Monday: The price of a barrel of oil went negative. | Something bizarre happened in the markets on Monday: The price of a barrel of oil went negative. |
| Oil prices tumbled as the economic crisis set off by the coronavirus pandemic continued to destroy demand for energy, and as concerns grew that storage tanks in the United States were near capacity and unable to hold all the unused crude. | Oil prices tumbled as the economic crisis set off by the coronavirus pandemic continued to destroy demand for energy, and as concerns grew that storage tanks in the United States were near capacity and unable to hold all the unused crude. |
| The bizarre movement in the market on Monday was exaggerated by a quirk in the way oil prices are set. | The bizarre movement in the market on Monday was exaggerated by a quirk in the way oil prices are set. |
| Traders pay varying prices depending on the grade of crude, where it comes from, and the date on which it is meant to be delivered. Normally these differences are small, and they go unnoticed outside of the energy market. But on Monday they were exacerbated by sharp swings in the price. | Traders pay varying prices depending on the grade of crude, where it comes from, and the date on which it is meant to be delivered. Normally these differences are small, and they go unnoticed outside of the energy market. But on Monday they were exacerbated by sharp swings in the price. |
| A benchmark for oil that will be delivered next month went negative, meaning it was essentially deemed worthless, suggesting that people who had oil to sell were willing to pay for it to be taken off their hands. | A benchmark for oil that will be delivered next month went negative, meaning it was essentially deemed worthless, suggesting that people who had oil to sell were willing to pay for it to be taken off their hands. |
| Oil that is scheduled to be delivered in June, more reflective of the market’s view on what the value of crude is right now, also fell, sliding 16 percent to about $21 a barrel. | Oil that is scheduled to be delivered in June, more reflective of the market’s view on what the value of crude is right now, also fell, sliding 16 percent to about $21 a barrel. |
| The problem is that the United States is running out of places to store its oil. | The problem is that the United States is running out of places to store its oil. |
| Oil is already being stockpiled on barges out at sea, and in any nook and cranny companies can find in their storage facilities. Now, traders are worrying that even this space is running out. Under futures contracts, West Texas Intermediate — the American oil-price benchmark — is delivered to Cushing, Okla., but investors are worried that there will be no place to put it there. | Oil is already being stockpiled on barges out at sea, and in any nook and cranny companies can find in their storage facilities. Now, traders are worrying that even this space is running out. Under futures contracts, West Texas Intermediate — the American oil-price benchmark — is delivered to Cushing, Okla., but investors are worried that there will be no place to put it there. |
| “Cushing inventories continue to increase at record-high rates and are expected to hit tank tops in May,” said Hillary Stevenson, director, oil markets, at Genscape a market intelligence firm. | “Cushing inventories continue to increase at record-high rates and are expected to hit tank tops in May,” said Hillary Stevenson, director, oil markets, at Genscape a market intelligence firm. |
| Broader worries also growing that the deal reached on April 12 between the Organization of the Petroleum Exporting Countries, Russia and other producers will not be sufficient to prevent the oil markets being overwhelmed with a record surge of surplus oil. With much of the world in lockdown because of the coronavirus pandemic, global demand for oil has collapsed, leading to record surpluses. | Broader worries also growing that the deal reached on April 12 between the Organization of the Petroleum Exporting Countries, Russia and other producers will not be sufficient to prevent the oil markets being overwhelmed with a record surge of surplus oil. With much of the world in lockdown because of the coronavirus pandemic, global demand for oil has collapsed, leading to record surpluses. |
| The numbers explain why investors are worried. Under the terms of the arrangement brokered by President Trump, Saudi Arabia, Russia and other countries to cut will cut 9.7 million barrels a day in production, beginning in May. Analysts forecast that oil consumption in April will fall by about three times that. | The numbers explain why investors are worried. Under the terms of the arrangement brokered by President Trump, Saudi Arabia, Russia and other countries to cut will cut 9.7 million barrels a day in production, beginning in May. Analysts forecast that oil consumption in April will fall by about three times that. |
| “It is not enough” to avoid inventories rapidly building up, said Bjornar Tornhaugen, head of oil markets at Rystad Energy, a consulting firm. | “It is not enough” to avoid inventories rapidly building up, said Bjornar Tornhaugen, head of oil markets at Rystad Energy, a consulting firm. |
| On Monday, Halliburton, which provides equipment and services to energy companies, gave an early indication of the damage being sustained by the industry when it reported a $1 billion loss in the first quarter compared with net income of $152 million in the same period a year earlier. | On Monday, Halliburton, which provides equipment and services to energy companies, gave an early indication of the damage being sustained by the industry when it reported a $1 billion loss in the first quarter compared with net income of $152 million in the same period a year earlier. |
| When energy traders in the United States worry about whether they’re running out of place to store their oil, they’re mostly thinking of one place: Cushing, Okla. | When energy traders in the United States worry about whether they’re running out of place to store their oil, they’re mostly thinking of one place: Cushing, Okla. |
| It’s the main U.S. storage hub, and the designated delivery point on American crude futures contracts. And Cushing is starting to reach its physical limit. | It’s the main U.S. storage hub, and the designated delivery point on American crude futures contracts. And Cushing is starting to reach its physical limit. |
| With a capacity to hold 80 million barrels of oil, Cushing only has 21 million barrels of free storage left, according to Rystad Energy. That’s less than two days of American production. Back in February, Cushing was less than half filled with 37 million barrels, and oil experts say it will be filled to the brim sometime in May. | With a capacity to hold 80 million barrels of oil, Cushing only has 21 million barrels of free storage left, according to Rystad Energy. That’s less than two days of American production. Back in February, Cushing was less than half filled with 37 million barrels, and oil experts say it will be filled to the brim sometime in May. |
| Major oil companies like Exxon Mobil and Chevron have their own storage facilities and refineries but hundreds of smaller producers rely on pipeline companies to transport their production, and to storage tanks in Cushing to hold onto it. | Major oil companies like Exxon Mobil and Chevron have their own storage facilities and refineries but hundreds of smaller producers rely on pipeline companies to transport their production, and to storage tanks in Cushing to hold onto it. |
| With American oil exports evaporating as the world economy falls into a deep recession, there’s more crude being produced than can be stored in the country. | With American oil exports evaporating as the world economy falls into a deep recession, there’s more crude being produced than can be stored in the country. |
| “You have this enormous surplus building,” said Aaron Brady, vice president of oil market services at IHS Markit, an energy consultancy. “If you are a producer, your market has disappeared and if you don’t have access to storage you are out of luck. The system is seizing up.’’ | “You have this enormous surplus building,” said Aaron Brady, vice president of oil market services at IHS Markit, an energy consultancy. “If you are a producer, your market has disappeared and if you don’t have access to storage you are out of luck. The system is seizing up.’’ |
| The problem isn’t limited to the United States. Out of an estimated 6.8 billion barrels of storage in the world, nearly 60 percent is filled, according to data assembled by various energy consultancies. Storage is almost complete filled in the Caribbean and South Africa, and Angola, Brazil and Nigeria may run out of warehousing capacity within days. | The problem isn’t limited to the United States. Out of an estimated 6.8 billion barrels of storage in the world, nearly 60 percent is filled, according to data assembled by various energy consultancies. Storage is almost complete filled in the Caribbean and South Africa, and Angola, Brazil and Nigeria may run out of warehousing capacity within days. |
| Stocks on Wall Street tumbled, with shares of energy producers following the price of crude oil lower on Monday. | Stocks on Wall Street tumbled, with shares of energy producers following the price of crude oil lower on Monday. |
| The S&P 500 fell about 1.8 percent. | The S&P 500 fell about 1.8 percent. |
| Oil producers were among the worst performing shares in the index. Exxon and Chevron both fell more than 4 percent. United Airlines and American Airlines also fell more than 4 percent, after the former said that it had lost almost $2 billion in the first three months of the year. | Oil producers were among the worst performing shares in the index. Exxon and Chevron both fell more than 4 percent. United Airlines and American Airlines also fell more than 4 percent, after the former said that it had lost almost $2 billion in the first three months of the year. |
| Technology stocks again fared better than the broader market, with the Nasdaq composite falling about 1 percent. Those stocks have been gaining in part because companies like Amazon and Netflix are seen as able to profit from stay-at-home orders as consumers pullback on spending elsewhere. Netflix, which will report its quarterly earnings results later this week, rose more than 3 percent on Monday. | Technology stocks again fared better than the broader market, with the Nasdaq composite falling about 1 percent. Those stocks have been gaining in part because companies like Amazon and Netflix are seen as able to profit from stay-at-home orders as consumers pullback on spending elsewhere. Netflix, which will report its quarterly earnings results later this week, rose more than 3 percent on Monday. |
| As investors try to gauge the extent of the damage caused by the coronavirus pandemic, they’ll face a flood of updates this week from other big companies, with about one-fifth of the S&P 500 expected to report first-quarter profits. | As investors try to gauge the extent of the damage caused by the coronavirus pandemic, they’ll face a flood of updates this week from other big companies, with about one-fifth of the S&P 500 expected to report first-quarter profits. |
| Monday’s losses may have been tempered somewhat by progress on the response to the pandemic. Lawmakers in Washington said they were nearing a deal for a new support package for small businesses, and President Trump said the authorities would step up testing. | Monday’s losses may have been tempered somewhat by progress on the response to the pandemic. Lawmakers in Washington said they were nearing a deal for a new support package for small businesses, and President Trump said the authorities would step up testing. |
| Continued efforts to bolster the economy, reopen businesses, and contain the pandemic have helped lift stocks from the depths of their collapse in March. | Continued efforts to bolster the economy, reopen businesses, and contain the pandemic have helped lift stocks from the depths of their collapse in March. |
| In recent days, though, stocks have settled into a middle zone: far from the low levels that clearly signaled a bear market, but not conclusively blossoming into a new bull market either. | In recent days, though, stocks have settled into a middle zone: far from the low levels that clearly signaled a bear market, but not conclusively blossoming into a new bull market either. |
| “You could almost argue that we’re in a bull market and a bear market at the same time,” said Eddie Perkin, the chief equity investment officer at Eaton Vance, a Boston-based money manager. | “You could almost argue that we’re in a bull market and a bear market at the same time,” said Eddie Perkin, the chief equity investment officer at Eaton Vance, a Boston-based money manager. |
| Small-business owners have accused some of the country’s largest banks of unfairly prioritizing applications from their wealthiest clients for aid under the government’s $349 billion stimulus. | Small-business owners have accused some of the country’s largest banks of unfairly prioritizing applications from their wealthiest clients for aid under the government’s $349 billion stimulus. |
| Customers of JPMorgan Chase and Wells Fargo have sued the banks in federal court, saying data provided by the Small Business Administration on the average size of the loans shows they doled out funds to larger customers first. | Customers of JPMorgan Chase and Wells Fargo have sued the banks in federal court, saying data provided by the Small Business Administration on the average size of the loans shows they doled out funds to larger customers first. |
| The S.B.A., which is administering the stimulus program, known as the Paycheck Protection Program, required the banks to handle applications on a first-come, first-served basis, but they had wide latitude on whose applications to accept. | The S.B.A., which is administering the stimulus program, known as the Paycheck Protection Program, required the banks to handle applications on a first-come, first-served basis, but they had wide latitude on whose applications to accept. |
| The lawsuits — two against Chase and one against Wells Fargo — say that the banks chose which applications to accept first, and smaller customers were not given the chance to apply as quickly as larger ones in some cases. In other instances, the lawsuits say, the banks sat on some smaller customers’ applications instead of immediately submitting them to the S.B.A. for approval. | The lawsuits — two against Chase and one against Wells Fargo — say that the banks chose which applications to accept first, and smaller customers were not given the chance to apply as quickly as larger ones in some cases. In other instances, the lawsuits say, the banks sat on some smaller customers’ applications instead of immediately submitting them to the S.B.A. for approval. |
| Chase said in a statement on its website on Sunday that some of the disparity between the speed at which certain clients’ applications were processed compared with others had to do with which parts of Chase’s sprawling operations the clients applied to for help. “Within each business, we did not prioritize certain clients, large or small,” it said. | Chase said in a statement on its website on Sunday that some of the disparity between the speed at which certain clients’ applications were processed compared with others had to do with which parts of Chase’s sprawling operations the clients applied to for help. “Within each business, we did not prioritize certain clients, large or small,” it said. |
| A Wells Fargo spokeswoman declined to comment on the lawsuit. | A Wells Fargo spokeswoman declined to comment on the lawsuit. |
| Shake Shack said it was returning a $10 million loan from a federal program to help small businesses amid mounting criticism that large chains had been favored over smaller operators in the program’s rollout to the restaurant industry. | Shake Shack said it was returning a $10 million loan from a federal program to help small businesses amid mounting criticism that large chains had been favored over smaller operators in the program’s rollout to the restaurant industry. |
| The $349 billion stimulus effort, which was distributed on a first-come, first-serve basis, was exhausted in just two weeks, with many loans favoring larger companies that were better able to navigate the application process. Major chains like Potbelly and Ruth’s Chris Steakhouse were able to secure tens of millions of dollars in loans while other owners were left scrambling to survive the deepening financial crisis. | The $349 billion stimulus effort, which was distributed on a first-come, first-serve basis, was exhausted in just two weeks, with many loans favoring larger companies that were better able to navigate the application process. Major chains like Potbelly and Ruth’s Chris Steakhouse were able to secure tens of millions of dollars in loans while other owners were left scrambling to survive the deepening financial crisis. |
| Shake Shack, with 189 outlets and nearly 8,000 employees in the United States, said on Sunday that it would return the $10 million in funds it had received, after securing additional capital through an equity transaction on Friday. | Shake Shack, with 189 outlets and nearly 8,000 employees in the United States, said on Sunday that it would return the $10 million in funds it had received, after securing additional capital through an equity transaction on Friday. |
| But the return of those funds may come too late for the thousands of independent restaurateurs across the United States who are searching for a lifeline to survive the coronavirus pandemic. | But the return of those funds may come too late for the thousands of independent restaurateurs across the United States who are searching for a lifeline to survive the coronavirus pandemic. |
| In the restaurant industry, small operators who have been forced to close their dining rooms are growing increasingly concerned that the fine print of the loan program favors large chains at the expense of mom-and-pop eateries. | |
| Under the terms of the program, businesses that employ fewer than 500 people are eligible for loans, which will be forgiven if the borrower does not lay off staff or rehires them by June 30. But a subsection of the legislation makes certain types of businesses, including restaurant and hotel chains, with no more than 500 employees “per physical location” also eligible. | |
| The trade associations for the hotel and restaurant industries lobbied aggressively for that provision. | |
| The National Restaurant Association on Monday asked congressional leaders to create a recovery fund for the restaurant industry. In the letter, the trade association said that eight million restaurant employees had been laid off or furloughed and that the industry had lost $30 billion since March, with another $50 billion expected to disappear by the end of April. | The National Restaurant Association on Monday asked congressional leaders to create a recovery fund for the restaurant industry. In the letter, the trade association said that eight million restaurant employees had been laid off or furloughed and that the industry had lost $30 billion since March, with another $50 billion expected to disappear by the end of April. |
| “The restaurant industry has been the hardest hit by the coronavirus mandates — suffering more sales and job losses than any other industry in the country,” the letter said. “For an industry with sales that exceed the agriculture, airline, railroad, ground transportation, and spectator sports industries combined, a restaurant relief and recovery program is desperately needed.” | “The restaurant industry has been the hardest hit by the coronavirus mandates — suffering more sales and job losses than any other industry in the country,” the letter said. “For an industry with sales that exceed the agriculture, airline, railroad, ground transportation, and spectator sports industries combined, a restaurant relief and recovery program is desperately needed.” |
| As with much of life around the world, film and television production has ground to a halt because of the coronavirus pandemic — leaving stars, stylists, directors, studio chiefs, grips, writers, set builders, trailer cutters, agents and scores of other specialized Hollywood workers at home and confronting the same question almost everyone has: Now what? | As with much of life around the world, film and television production has ground to a halt because of the coronavirus pandemic — leaving stars, stylists, directors, studio chiefs, grips, writers, set builders, trailer cutters, agents and scores of other specialized Hollywood workers at home and confronting the same question almost everyone has: Now what? |
| Across the industry, shooting is not expected to resume until August, in part because of the time it will take to reassemble casts and crews once the coronavirus threat subsides. That leaves a vast number of people without work. Hollywood supports 2.5 million jobs, according to the Motion Picture Association of America; many workers are freelancers, getting paid project to project. | Across the industry, shooting is not expected to resume until August, in part because of the time it will take to reassemble casts and crews once the coronavirus threat subsides. That leaves a vast number of people without work. Hollywood supports 2.5 million jobs, according to the Motion Picture Association of America; many workers are freelancers, getting paid project to project. |
| Others in Hollywood, especially those on the upper end of moviedom’s caste system, are still working, albeit remotely. | Others in Hollywood, especially those on the upper end of moviedom’s caste system, are still working, albeit remotely. |
| David Oyelowo has been trying to finish his directorial debut, “The Water Man,” a tender family drama that counts Oprah Winfrey as an executive producer. | David Oyelowo has been trying to finish his directorial debut, “The Water Man,” a tender family drama that counts Oprah Winfrey as an executive producer. |
| Filming and editing are done. The original plan was to record the music with a 40-person orchestra in Macedonia, he said. Now, eight musicians will gather in Brussels in the next month to perform multiple parts that will then be layered together by a sound mixer in Nashville. | Filming and editing are done. The original plan was to record the music with a 40-person orchestra in Macedonia, he said. Now, eight musicians will gather in Brussels in the next month to perform multiple parts that will then be layered together by a sound mixer in Nashville. |
| IBM reported its first-quarter results after the market closed on Monday, showing slightly lower revenue for the quarter compared with a year ago, in one of the first detailed looks at the pandemic’s impact on the tech sector. The company also withdrew its earnings guidance for the year “in light of the current Covid-19 crisis.” | |
| IBM is the largest tech company that sells only to businesses and government agencies. So it has long been seen as a bellwether of corporate demand and trends. | |
| The company reported that first-quarter operating earnings fell 18 percent to $1.84 per share. That was slightly higher than analysts’ average estimate of $1.82 a share, according to FactSet. Total revenue from IBM’s hardware, software and services fell 3.4 percent to $17.6 billion, just below the $17.8 billion forecast by Wall Street analysts. | |
| IBM said that despite the weakness in traditional products, the sales of its cloud and cognitive software unit rose 5 percent to $5.2 billion. With the coronavirus forcing millions to work from home, demand is increasing for cloud technology that enables remote work and communication. | |
| Shares in IBM fell about 1 percent in after-hours trading. | |
| Intel will report on Thursday. Apple, Microsoft, Alphabet, Amazon and Facebook come next week. | |
| United Airlines lost more than $2 billion in the first quarter, a decline driven by the virtual stalling of the global airline industry in March, the company said in a securities filing on Monday. It said that it expected to receive access to a $4.5 billion loan from the Treasury Department under the economic relief law. United has already received about $5 billion from the federal government, mostly in grants intended to pay employees through September. | United Airlines lost more than $2 billion in the first quarter, a decline driven by the virtual stalling of the global airline industry in March, the company said in a securities filing on Monday. It said that it expected to receive access to a $4.5 billion loan from the Treasury Department under the economic relief law. United has already received about $5 billion from the federal government, mostly in grants intended to pay employees through September. |
| Tapestry, the owner of Coach, Kate Spade and Stuart Weitzman, said on Monday that it would extend salary and benefits to most North American retail employees through May 30. The company will also cut 2,100 part-time associates across the three brands starting April 25, and give them a $1,000 one-time payment. Tapestry said that all of its stores in mainland China had now reopened. | Tapestry, the owner of Coach, Kate Spade and Stuart Weitzman, said on Monday that it would extend salary and benefits to most North American retail employees through May 30. The company will also cut 2,100 part-time associates across the three brands starting April 25, and give them a $1,000 one-time payment. Tapestry said that all of its stores in mainland China had now reopened. |
| Reporting was contributed by Steve Lohr, Michael de la Merced, Emily Flitter, Stanley Reed, David Yaffe-Bellany, Niraj Chokshi, Jeanna Smialek, Carlos Tejada, Brooks Barnes, Nicole Sperling, Austin Ramzy, Adam Satariano, Sapna Maheshwari, Jason Karaian, Ron Lieber, Brian X. Chen, Ben Casselman, Jim Tankersley and Kevin Granville. |