Saudi Aramco sees ‘partial recovery’ in oil market as China picks up
Saudi Aramco said Sunday that its net profit plunged 73.4% in the second quarter to $6.6 billion. But CEO Amin Nasser said there are signs of improvement as coronavirus shutdowns ease.
It was the second consecutive quarter of falling earnings at the world’s top oil producer — net profit in the January-March period slumped 25%.
“We are seeing a partial recovery in the energy market as countries around the world take steps to ease restrictions and reboot their economies,” Nasser said in a statement.
He elaborated on a conference call with reporters, pointing to the world’s second largest economy as a bright spot.
“Look at China, their gasoline and diesel demand is almost at pre-COVID 19 levels. We are seeing that Asia is picking up and other markets [too],” he said, according to Reuters. The massive Saudi oil monopoly has seen shares drop by over 6% this year in light of plummeting oil prices. Brent crude futures, the global benchmark, are off more than 30% year-to-date.
Aramco, which went public last year in the world’s biggest-ever IPO, is looking more and more like an outlier in an industry that has been rocked by plummeting demand caused by the coronavirus.
Aramco is sticking with a $75 billion dividend for this year even as rivals such as Royal Dutch Shell and BP slash investor payouts. And there are few signs the company will follow rivals who say they are pivoting to cleaner fuel.
Stay tuned: Aramco executives will discuss their second quarter results in an investor call scheduled for 8:30 a.m. ET.
Trump’s executive orders spark confusion
President Trump signed executive actions over the weekend designed to extend expanded unemployment benefits, as well as assist renters and homeowners. But they may not deliver the help many Americans need.
Administration officials are struggling to explain how the executive orders will work, and critics insist that some measures are unconstitutional. Payroll taxes and unemployment benefits are two big problem areas.
The president’s move to defer payroll tax contributions for some Americans is already faltering amid arguments that only Congress sets tax policy and that workers would be stuck with a huge bill at the end of the year. His plan to extend special federal unemployment benefits rests on cash-strapped states picking up 25% of the tab.
New York’s Democratic Governor, Andrew Cuomo, said Sunday that Trump’s initiative was “laughable.” “You can’t now say to states who have no funding, you have to pay 25% of the unemployment insurance,” he said.
Even Governor Mike DeWine of Ohio, a Republican, told CNN that he’s not yet sure if his state will take the federal money for unemployment. States would have to set up an entirely new system to deliver the additional aid.
Where does that leave companies and workers? The best chance for delivering much-needed stimulus rests with Congress and the normal legislative process. Trump issued his executive orders after weeks of negotiations failed to produce a breakthrough. Congressional Democrats favor a much larger relief package.
“I think that public confidence is really important and another support package is really incredibly important,” Charles Evans, president of the Federal Reserve Bank of Chicago, told CBS on Sunday.
Hotel and travel earnings on tap
Results from Marriott and Royal Caribbean could set the tone for US markets on Monday, with investors getting the latest data on how travel companies are coping with the unprecedented trauma caused by the pandemic.
Why it matters: The travel industry generates an estimated $5.7 trillion in revenue each year. It is responsible for an estimated 319 million jobs, or roughly one in 10 people working on the planet.
Plus, the industry has the potential to become a major drag on the global recovery if the coronavirus continues prevent a return to normal travel patterns.
At CNN Business, we’re monitoring hotel occupancy rates, US gas prices and the number of travelers at TSA checkpoints on our recovery tracker.
Marriott and Royal Caribbean report earnings before the opening bell.
- Tencent Music will publish earnings after the close.
Coming tomorrow: SoftBank and InterContinental report earnings. Plus, the latest data on Germany’s economic recovery.