Oil tumbles 5% as new Covid variant sparks global demand concerns

Working oil pumps against a sunset sky.

Imaginima | E+ | Getty Images

Oil prices tumbled to the lowest level in more than two months Friday as the new Covid-19 strain sparked fears about a demand slowdown just as supply increases.

The leg lower came amid a broad sell-off in the market with Dow futures dropping more than 800 points. The World Health Organization warned Thursday of a new Covid variant detected in South Africa. It could potentially be more resistance to vaccines thanks to its mutations, although the WHO said further investigation is needed.

U.S. oil declined 5%, or $4.27, to $74.12 per barrel. International benchmark Brent crude futures slid 5.6% to $77.64 per barrel.

A decrease in travel and potential new lockdowns, both of which could hit demand, come just as supply is about to increase.

“It appears that the discovery a COVID-19 variant in southern Africa is spooking markets across-the-board. Germany is already limiting travel from several nations in the affected region,” said John Kilduff, partner at Again Capital. “The last thing that the oil complex needs is another threat to the air travel recovery,” he added.

On Tuesday the Biden Administration announced plans to release 50 million barrels of oil from the Strategic Petroleum Reserve. The move is part of a global effort by energy-consuming nations to calm 2021′s rapid rise in fuel prices. India, China, Japan, South Korea and the U.K. will also release some of their reserves.

“This [the sell-off] is attributable to concerns about a sizeable oversupply in early 2022 that is set to be brought about by the upcoming release of strategic oil reserves in the US and other major consumer countries, plus the ongoing steep rise in new coronavirus cases,” noted analysts at Commerzbank. “Furthermore, an even more transmissible variant of the virus has been discovered in South Africa, prompting a noticeable increase in risk aversion on the financial markets today.”

OPEC and its oil-producing allies are set to meet on Dec. 2 to discuss production policy for January and beyond. The group’s slowly eased the historic output cuts it agreed to in April 2020 as the coronavirus sapped demand for petroleum products, restoring 400,000 barrels per day of oil to the market each month.

The group has maintained its gradual taper despite calls from the White House and others to hike output as oil prices surged to multi-year highs. West Texas Intermediate crude futures hit a seven-year high in October, while Brent rose to a three-year high.

U.S. oil is now down more than $10 since its October high of $85.41.

“The coordinated SPR release is getting a second look, as well, especially with OPEC decrying it and asserting that the release will tip the global market back into surplus. The release is much more than just a drop in the bucket,” added Kilduff.

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KT Opinion: Pent-up demand seen driving revenge travel – News

The world is coming alive again despite the devastation caused by the coronavirus

By Team KT

Published: Wed 24 Nov 2021, 10:58 PM

Nothing like wanderlust to beat the pandemic blues. ’Tis the season to journey after millions missed their annual vacations and trips home to their loved ones last year. The world is coming alive again despite the devastation caused by the coronavirus. Global travel is seeing a revival after more than a year of coronavirus-induced lockdowns and curbs that stopped the world in its tracks. There is, in fact, a surge in people flying to beach destinations and tourist spots across the world from the UAE which is itself attracting millions of visitors who are here for the Expo. Cases, however, are rising in Europe which could upend travel plans to the continent. Such dampeners ahead of the long year-ending holiday season have been taken in the stride. There’s no time to tarry but to journey, and carry on from where we left off.

Air fares have skyrocketed but passengers are not holding back on their spends. They aren’t looking back and splurging on journeys that didn’t happen last year. They are venturing out to a masked normal after getting their two doses in the hope that things will be the same on their trips again. Welcome to the age of revenge travel where people are going place with gusto. They are making up for lost time. There’s a lot of ground to cover by air, train, ship and or after 2021was lost in the Covid wilderness for millions of people. Operators are calling it pent up demand. Revenge travel is sweet because people have realised the meaning of loss and suffering. They are forgetting distances and the distress with long journeys and short trips to connect again with friends and family. Some like being left alone on these journeys. Many are launching new ventures as they foray abroad again and find new hope after the gloom that enveloped us only a year ago.


For others revenge travel may be about finding a purpose in life and striking a balance between work and home. Revenge travel is also about working from remote locations while enjoying the simple pleasures of life. Taking a trek and relaxing on the beach before a virtual call with colleagues thousands of miles away is now a reality. Who knows, it could be a way of life soon if it hasn’t already happened yet. Mobile offices are springing up and travel is now being reclassified as a ‘need’. A recent survey from SAP Concur said 96 per cent of 3.850 business travellers in 25 global markets are eager to travel again for work. Eighty per cent admit that unless they travel, their professional lives will suffer. That’s good news for the travel industry which is seeing record hotel and flight bookings. For those on a budget, there are always road trips and domestic travel options on offer. People realise that travel is worth it personally and professionally. And as long as they are jabbed and travel safely and stay away from crowds, there is hope that life will be normal again.

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Southwest Looks to Tap ‘Clear, Steady’ Upward Trend in Corp. Travel Demand

Southwest’s Andrew Watterson discusses:

  • A surprise rebound in convention/meeting business
  • Channel shift from Southwest’s GDS strategy
  • Getting operations beyond “acceptable” levels

Southwest Airlines last week celebrated the 15th anniversary of its launch of operations in Denver, which since has grown into one of the largest centers of business for the carrier. Southwest EVP and chief commercial officer Andrew Watterson spoke with BTN transportation editor Michael B. Baker during the event about the effect Southwest’s growth in Denver has had on corporate travel, the carrier’s strategy to recover from recent operational challenges and his outlook for corporate travel recovery.

BTN: Airline executives generally have said they expect slower business travel growth this year and then acceleration next year. Is that what you expect?

Andrew Watterson: That’s the current supposition, though predictions for business travel return have been erroneous for a year and a half now, but it’s a clear, steady, upward trend that we’re seeing. [Small and medium-sized businesses] were first to get back out on the road, but we’re seeing the supermajority of our accounts are active. It’s the travelers per account that’s really depressed, but for the travelers who are traveling, their rate of travel is down only about 10 percent. 

A year or so ago, people would say conventions and internal travel are not coming back, but we’re seeing a lot of meetings and convention business, because those are open. People are traveling on business to Las Vegas or Orlando to have a convention or meeting and interact with others, and we’re seeing a lot of companies, especially professional services companies, getting together in their offices. They can’t go to a client site, so they’ll fly their teams to a centralized office, work there a couple of days a week and then go back to their home office. That has been a surprise, because if you’d asked anybody 12 to 15 months ago, they’d say those would be the last things to come back, but they’ve been the first things.

BTN: Will it ultimately return to pre-pandemic levels?

Watterson: A lot of times people get overly focused on whether we’ll get to 100 percent of travel demand. The business travel community just being back to 80 percent or 85 percent is material. There will be different types of business travel. While I don’t minimize that, it’s true with every recession. If you go back to the Great Recession or 9/11, those changed the nature of business travel, so it’s common for an economic downturn to result in a change of busines travel perception. After 9/11, we had the security hassle, which put a damper on short-haul flying. During the Great Recession, a lot of the big conventions were vilified, and so there was a stigma on conventions that lasted a few years. 

BTN: After your recent announcement of capacity adjustments, are you confident that Southwest will be ready for the upcoming holiday demand?

Watterson: You never know what the weather is going to be like. What we’re seeing is that with summertime, we had ramped up our capacity, and we didn’t lay anybody off or furlough anybody, but we did have people on extended leave. We were calling them back, and then we were hiring more people, and just like the rest of the economy, we found out we couldn’t hire people as fast as we used to be able to hire, and some people who came back from leave for whatever reason would turn around and ask for unpaid leave. A combination of coming up short in hiring goals and unpaid leaves meant staffing wasn’t right this summer. So, we immediately adjusted for capacity and brought down our capacity. We won’t be back to the same levels we were this summer until the earliest March or perhaps later on, so that gives us more time to ramp up the hiring we need. There will be less flights this holiday season versus the summer, and more people we’ve been hiring, which puts us in a good position.

BTN: Outside of that one weekend, how has Southwest’s operational performance been in recent months?

Watterson: Since we did the immediate reduction we started in September and beyond, we’ve had acceptable on-time performance. We’d like to do better than that, but it’s good enough. We’re not getting complaint letters from it. We know the day-to-day recoverability will be helped by a more dense network that we get each month that goes by. Right now, the reliability is at an acceptable level, but it needs to be better than that. We generally had timed the increase in our depth for the return of business travel, which we expect to be during 2022.

We won’t be back to the same levels we were this summer until the earliest March or perhaps later on, so that gives us more time to ramp up the hiring we need. There will be less flights this holiday season versus the summer, and more people we’ve been hiring, which puts us in a good position.”

BTN: What feedback have you gotten from corporate customers regarding the new destinations Southwest has added?

Watterson: A good portion of them are leisure, and for business travelers, they like that, because they can use the points they earn on business to fly leisure. The one that have a direct business benefit are the bigger city airports, like Chicago O’Hare, Bush Intercontinental and Miami, but we also have medium-sized city airports like Colorado Springs, Fresno and Bozeman, (Mont.,) where there’s business going on there as well and corporations located there or that send people there are happy. We see in big metro areas, where we’re in multiple airports, that gives people choices.

Denver is a big focus for us. It’s our largest airport. We entered 15 years ago in a modest fashion and then, as we’ve seen an increasingly robust response, we’ve ramped up to be what we are now. We are getting 16 more gates as they finish our concourse, which is a total of 40 fights, so we’ll have ample opportunity to fly to new destinations and add more frequencies. We find Denver is a market where air travel is essential to doing business. If you think about big cities, in most you can drive to another big city. We’re based in Dallas, and you can drive to Austin if you want or Houston if you want. If you live in New York, you can drive to Boston or Philly or take a train. But Denver, the big cities aren’t within driving distance, so you need to fly to do business. It’s brought a greater utility to the business community in Denver, especially with our flexibility in and out. We keep adding more people here and more flights here, and we’re grateful to have been embraced by the city and business community. 

BTN: Now that you are live with all the major global distribution system suppliers, have you seen much channel shift?

Watterson: We’re seeing definitely incremental business from being in the three GDSs with full functionality. We know there’s some shift, and when we did the business case and plan for doing this, we counted on the big shift. What we are seeing now is that corporations will still use multiple channels for different purposes. There may be a senior group that gets high-touch support from the travel management company and goes through the GDS, and there may be a self-service, stand-alone business unit that uses Swabiz. Something in between might use a direct connect. The ultimate channel shift will depend on what the travel purpose is for each of those segments. 

BTN: What response have you seen to the recent announcement of a new Rapid Rewards Business program?

Watterson: We’ve been doing beta for quite a while just to get the kinks out. We had a real surge of interest once we went public on it, and we’ve seen lots of sign-ups. It’s a way for corporations that aren’t big enough to have a negotiated discount but still want to favor us with some activity to de facto to get a discount, in terms of earning points they can redeem for company travel. This is a way for them to earn a discount through demonstrated performance. 

BTN: What about your recent announcements on sustainability?

Watterson: We’re allowing multiple options for corporations, depending on their sentiment and how they want to engage. If your company is large enough that you can fund acquisition of sustainable aviation fuel, we can work together to get a direct line for that for you, all the way down to the lower end, as an individual or company, where we offer to offset a particular flight you are taking. We will give you Rapid Rewards points for that and match your gift, so we end up contributing more than you. 

BTN: Is codesharing or interlining with other carriers still something Southwest is considering?

Watterson: It’s on our radar. Each year we look at our tech budget to see what to spend it on. Things like [Extended-range Twin-engine Operational Performance Standards] to fly to Hawaii, the GDS or refreshing Swabiz. We also just went live with a brand-new maintenance system. You can also use it for something like codeshare and interlines, so that had not yet made it into that short list to do. It’s something we still want to do moving forward. We think it’s a good financial benefit as well as offering travelers extra options, but it’s the icing, not the cake, for us.

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Oil approaches $84 as lifting of U.S. travel ban boosts demand

A pump jack stands idle in Dewitt County, Texas January 13, 2016. REUTERS/Anna Driver

  • U.S. lifts travel restrictions, travellers line up for flights
  • JPMorgan Chase says oil demand nearly back to pre-pandemic level
  • Biden could announce action on oil this week-energy secretary
  • Coming up: API supply report, 2030 GMT

LONDON, Nov 9 (Reuters) – Oil rose towards $84 a barrel on Tuesday, gaining for a third session, as the U.S. lifting of travel restrictions and more signs of a global post-pandemic recovery lifted the demand outlook, while supply remained tight.

On Monday, travellers took off for the United States again, while the passing of U.S. President Joe Biden’s infrastructure bill and better-than-expected Chinese exports helped paint a picture of a recovering global economy. read more

Brent crude rose 31 cents, or 0.4%, to $83.74 a barrel by 1150 GMT, after gaining 0.8% on Monday. U.S. oil advanced 36 cents, or 0.4%, to $82.29, also after a 0.8% rise the previous day.

“With the re-opening of U.S. borders for vaccinated travellers, jet fuel demand ought to receive a healthy … boost,” said Tamas Varga of oil broker PVM.

“The passage of the $1 trillion U.S. infrastructure bill in Congress is also expected to provide additional help.”

The price of Brent has risen over 60% this year and hit $86.70, a three-year high, on Oct. 25, supported by supply restraint by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, and recovering demand.

At a meeting last week, OPEC+ decided to stick to its existing pace of easing of record output cuts and rebuff U.S. pleas to pump more – helping to keep supply tight for the near term in the view of some analysts.

JPMorgan Chase said global demand for oil in November was already nearly back to pre-pandemic levels of 100 million barrels per day (bpd), following last year’s collapse.

Biden, however, may take measures as early as this week to address soaring gasoline prices, U.S. Energy Secretary Jennifer Granholm said on Monday. read more

Despite a tight global market, U.S. crude inventories are expected to have risen for a third straight week, possibly helping to cap further gains in prices.

The first of this week’s two supply reports, from industry group the American Petroleum Institute, is due at 2030 GMT.

Additional reporting by Aaron Sheldrick; Editing by Susan Fenton, Kirsten Donovan

Our Standards: The Thomson Reuters Trust Principles.

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Latest news updates: Booking Holdings ‘encouraged’ by signs of recovery in travel demand

Democratic lawmakers appeared to near a deal on the so-called “Salt” cap on federal tax deductions for state and local taxes on Tuesday, in a win for House moderates from wealthier states who have long railed against the policy.

Donald Trump’s 2017 tax reforms limited the amount households could deduct in state and local property taxes from their federal income tax at $10,000, in a move that hit homeowners in states with high state and local property taxes, such as New York, New Jersey and California. Critics accused the then-president of unfairly punishing voters in “blue” states that voted against him 2016.

A small group of House Democrats, led by Josh Gottheimer of New Jersey, have led efforts to include a reversal of the tax changes in President Joe Biden’s “Build Back Better” plan, threatening to withhold support for the wider bill unless the cap is eliminated. But progressive critics have opposed the move, saying it would disproportionately benefit rich Americans.

Lawmakers seemed to be nearing a deal to scrap the cap for five years on Tuesday. Democrats on Capitol Hill are now weighing a five-year suspension of the cap, through 2025, retroactively applied to include the current tax year, according to one person briefed on the negotiations.

Gottheimer issued a joint statement on Tuesday with fellow New Jersey Democrat Mikie Sherrill and New York Democrat Tom Suozzi, saying the cap “remains a punishing blow to our home states . . . as we work to recover from the pandemic and get our economies on strong footing and our constituents back to work”.

“Today’s news is encouraging for a Salt cap repeal to be included in the final reconciliation package,” they added, saying they would “continue to work” with Democrats in the House and Senate on the issue.

But it remained unclear whether all 50 Democratic senators would sign up to such a move. Bernie Sanders, the progressive Vermont senator, issued a scathing statement on Tuesday evening saying “the last thing we should be doing is giving more tax breaks to the very rich”. Sanders said he was “open to a compromise approach” to protect the “middle class in high tax states”, but added: “I will not support more tax breaks for billionaires.”

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UPDATE 2-Marriott rides leisure travel demand to offset Delta drag

(Compares with estimates)

Nov 3 (Reuters) – Marriott International Inc on Wednesday topped estimates for third-quarter revenue and profit as a rebound in leisure travel countered a hit from fresh restrictions in Asia caused by the Delta variant.

Occupancy rates across its hotels in major regions continued to improve from pandemic lows with vaccinations and the reopening of economies encouraging more people to travel.

“Globally, leisure travel generally remained very strong throughout the quarter, while the Delta variant had the most impact on business transient demand,” Chief Executive Officer Anthony Capuano said in a statement.

The owner of brands such as JW Marriott and the Ritz-Carlton said occupancy in its key U.S. & Canada stood at 63.5% in the third quarter, compared to 37% a year earlier. Europe occupancy was at 46.7%, up 26.3% from the same period in 2020.

However, lockdowns and tighter social restrictions in southeast Asia following fresh coronavirus infections took a toll on occupancy in Greater China markets. It was 52.7%, compared to 61.4% a year earlier.

Meanwhile, hotel operators are expected to benefit from a jump in demand as countries either ease or plan to lift COVID-19 travel restrictions for fully vaccinated international visitors.

Although occupancy has recovered from last year’s lows, it remains well below the rates seen before the pandemic. Marriott’s worldwide occupancy rates stood at 58.2%, about 16.8% below its 2019 occupancy rates.

Excluding items, the company earned 99 cents per share in the third quarter, beating analysts’ average estimate of 98 cents, according to IBES data from Refinitiv.

Revenue rose 75% to $3.95 billion, above Wall Street’s expectation of $3.81 billion.

(Reporting by Ashwini Raj; Editing by Sriraj Kalluvila and Shailesh Kuber)

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Air Canada Posts Smaller Quarterly Loss as Travel Demand Improves | Investing News

(Reuters) -Air Canada reported a smaller quarterly loss on Tuesday, as Canada’s decision to open its borders to fully-vaccinated travelers and improving COVID-19 inoculation rates drove bookings at the country’s largest carrier.

North American airlines have reported upbeat results this quarter as vaccinated travelers, who have not seen friends and family for over a year, take to the skies.

Canada’s decision to open its borders also benefited Air Canada, which generated net cash of C$153 million ($123.34 million) in the third quarter, compared with its earlier expectation of a net cash burn between C$280 million and C$460 million.

“We are encouraged by the favourable revenue and traffic trends in the third quarter” Chief Executive Officer Michael Rousseau said in a statement.

Air Canada reported a loss of C$640 million, or C$1.79 per share in the quarter, compared with a loss of C$685 million, or C$2.31 per share, a year earlier.

Operating Revenue rose to C$2.1 billion, from C$757 million, a year ago.

($1 = 1.2405 Canadian dollars)

(Reporting by Nathan Gomes in Bengaluru; Editing by Shailesh Kuber)

Copyright 2021 Thomson Reuters.

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Airlines see drop in travel demand as covid cases rise

Cancellations could also be driven by travelers postponing trips to popular destinations, such as Florida, that have become hot spots, as well as to places that are reimposing restrictions. Hawaii, which was one of the most popular destinations this summer, recently announced it will limit social gatherings and reduce indoor capacity for bars, restaurants and social establishments to 50 percent.

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Business Travel Show Europe conference content available on demand

Business Travel Show Europe made its post-pandemic return as
a hybrid event this year with a two-day in-person show at ExCeL London from 29
September to 30 October, including educational content that was streamed online
and is now available on-demand for two weeks.

This year’s conference agenda included sessions on the
changing face of business travel, supplier negotiations, TMC models,
sustainability and safety and security. Attendees were able to attend panel
debates, buyer-only masterclasses and fundamentals sessions.

All sessions are now available to watch online through BTN
and Swapcard for two weeks.

Exhibitors at this year’s show, which took place alongside
The Meetings Show, praised the purchasing power of buyers in attendance, with one TMC saying it held more than 50 meetings with European
travel managers.

Louis Magliaro, executive vice president, BTN Group,
commented: “Events and travel are two of the sectors hardest hit by the
pandemic, so it’s been a really long time since we have all had a chance to
meet face to face and that showed.

“Every single person who came to ExCeL for Business Travel
Show Europe relished the opportunity to reconnect, see familiar faces, hug,
laugh and share a drink together. The buzz in the hall was palpable and, you
know what, it felt good. We can’t wait to be back next summer to do it all over
again but even stronger, bigger and better in support of the entire European
corporate travel industry.”

Business Travel Show Europe will return as a fully
face-to-face event in 2022, running from 29-30 June at ExCeL London alongside
TravelTech Show and The Meetings Show.

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