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Oil prices slide as Biden considers huge reserves release

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A general view shows Marathon Petroleum’s oil refinery, following Russia’s invasion of Ukraine, in Anacortes, Washington, March 9, 2022.

David Ryder | Reuters

LONDON — Oil prices dropped sharply on Thursday after reports that U.S. President Joe Biden is considering the release of up to 180 million barrels from the country’s strategic petroleum reserve (SPR).

Biden is set to give remarks later on Thursday, with multiple outlets reporting that the plan to cool soaring crude prices will involve the release of around 1 million barrels of oil per day for several months.

International benchmark Brent crude futures for May fell by around 3.5% to $109.50 per barrel by around 9:30 a.m. London time, paring earlier losses. U.S. crude futures for May delivery slid around 4.4% to $103.08 per barrel.

Gasoline prices have surged to record highs on Russia’s invasion of Ukraine and subsequent supply concerns, driving spikes in inflation across the global economy.

Russia is the world’s second-largest exporter of oil, and unprecedentedly punitive international sanctions following the invasion have disrupted flows out of the country.

In a research note Thursday, Goldman Sachs commodity analysts said the reported release from U.S. reserves would help the oil market toward rebalancing in 2022, but would not resolve its structural deficit.

“This would reduce the amount of necessary price-induced demand destruction, the sole oil rebalancing mechanism currently available in a world devoid of inventory buffers and supply elasticity,” Goldman Sachs said.

“This would remain, however, a release of oil inventories, not a persistent source of supply for coming years. Such a release would therefore not resolve the structural supply deficit, years in the making.”

They added that lower prices in 2022 would support oil demand while slowing the acceleration in U.S. shale production, leaving a deficit in 2023 and a likely need to refill the U.S. reserves.

The International Energy Agency will hold an emergency meeting on Friday to discuss oil supply concerns, Australian Energy Minister Angus Taylor announced on Thursday.

The Organization of Petroleum Exporting Countries and its allies including Russia (known as OPEC+) will also hold a meeting later on Thursday and is expected to maintain its existing deal to slowly increase production, after cutting output substantially during the Covid-19 pandemic and associated fall in demand.

A ‘risky strategy’

Ed Bell, senior director of market economics at Emirates NBD, told CNBC on Thursday that despite the record scale of the expected SPR release, an enormous downswing in its immediate aftermath would be unlikely.

“Markets are still going to be very much squarely focused on supply going forward and the lack of it that we’re going to be seeing from Russia, the incremental additions we’re going to be seeing from OPEC+ and so far the real lack of price response from U.S. producers to high prices,” Bell told CNBC’s “Capital Connection.”

“For the longer term though, I do think this is a bit of a risky strategy for the U.S. to draw down on its SPR so heavily if you think that we’re going to be going into the more heavy use summer months in the United States, we’re going to be drawing down inventories just as we’re going to be needing them in a time of uncertain supply conditions.”

Bell added that if the oil market maintains a structural deficit for a prolonged period, drawing down on U.S. reserves could “help underpin a bullish case for oil prices” over the next 12 to 24 months.



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Boeing to slash about 2,000 white-collar jobs in finance and HR, report says

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Boeing expects to slash about 2,000 white-collar jobs this year in finance and human resources through a combination of attrition and layoffs, the planemaker confirmed to Seattle Times newspaper on Monday.

Last month, the Virginia-based company announced it would hire 10,000 workers in 2023, but some support positions would be cut.

Back then Boeing acknowledged it will “lower staffing within some support functions” – a move meant to enable it to better align resources to support current products and technology development.

“Over time, some of our corporate functions have grown quite large. And with that growth tends to come bureaucracy or disparate systems that are inefficient,” the newspaper quoted Mike Friedman, a senior director of communications at Boeing as saying. “So we’re streamlining.”

Boeing did not immediately respond to Reuters’ request for comment. 

Last year, Boeing said it plans to cut about 150 finance jobs in the United States to simplify its corporate structure and focus more resources into manufacturing and product development.

Watch CNBC's full interview with Boeing's Dave Calhoun



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Trump appeals sanctions for ‘frivolous’ suit against Hillary Clinton

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presidential candidates Donald Trump and Hillary Clinton attend campaign rallies in Ambridge, Pennsylvania, October 10, 2016 and Manchester, New Hampshire U.S., October 24, 2016 in a combination of file photos.

Mike Segar | Carlos Barria | Reuters

Former President Donald Trump and one of his lawyers said Monday they are appealing nearly $1 million in sanctions imposed on them for what a federal judge called their “frivolous” lawsuit against Hillary Clinton and more than two dozen other defendants.

The court filing about the appeal came days after a lawyer for Trump and his attorney Alina Habba told the judge in the case they were willing to put up a bond of $1,031,788 to cover the costs of the sanctions while the federal Court of Appeals for the 11th Circuit considered the matter.

In imposing those sanctions Jan. 19, Judge John Middlebrooks said in an order, “We are confronted with a lawsuit that should never have been filed, which was completely frivolous, both factually and legally, and which was brought in bad faith for an improper purpose.”

Trump’s suit, which sought $70 million in damages, accused Clinton, former FBI officials, the Democratic National Committee and others of conspiring to create a “false narrative” that Trump and his 2016 presidential campaign against Clinton were colluding with Russia to try to win the election that year.

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Middlebrooks in September dismissed the lawsuit, which was filed in U.S. District Court for the Southern District of Florida, and barred Trump from refiling the complaint.

He later ordered Trump and Habba to pay more than $937,000 in sanctions.

Middlebrooks in his sanctions order called Trump “a mastermind of strategic abuse of the judicial process,” and a “prolific and sophisticated litigant who is repeatedly using the courts to seek revenge on political adversaries.”

A day after Middlebrooks issued that order, Trump voluntarily dropped another lawsuit he had pending before the same judge against New York Attorney General Letitia James. That suit was related to James’ pending $250 million fraud lawsuit against Trump and his company in Manhattan state court.

Jared Roberts, the lawyer for Trump and Habba, did not immediately respond to a request for comment from CNBC about the appeal.



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Nissan to buy up to 15% stake in Renault EV unit under reshaped alliance

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Pavlo Gonchar | LightRocket | Getty Images

Nissan and Renault on Monday unveiled details of their redesigned alliance, with the Japanese car maker committing to buy a stake of up to 15% in Renault’s electric vehicles unit Ampere.

The alliance junior partner Mitsubishi Motors will also consider investing in Ampere, which Renault aims to list, the companies said in a statement.

“Nissan’s intention is to invest up to 15% in Ampere, Renault Group’s EV & Software entity in Europe, with the aim to become a strategic investor,” the statement said ahead of a presentation in London.

The companies had already announced that under the deal to revive their long-standing alliance the French carmaker would reduce its stake in its Japanese partner to 15% from around 43% now.

Renault will transfer 28.4% of Nissan shares into a French trust, making the two more equal partners in the alliance.

Sources close to the matter said the agreement aimed to make the alliance freer and more balanced for the next 15 years.

The partnership will produce synergies from joint projects in Europe, India and Latin America, and the companies will work together in Renault’s flagship EV business, electronics and solid-state batteries. 

Renault will have flexibility to sell the Nissan shares held in the trust but “it has no obligation to sell the shares within a specific pre-determined period of time,” the statement on Monday said.

When it does sell, “Nissan would benefit from a right of first offer, to its or the benefit of a designated third party.”

The two companies last month announced a sweeping remake of their 24-year-old automaking alliance, which was thrown into disarray by the ouster of its architect and former chairman, Carlos Ghosn, amid financial scandal.

That announcement came after nearly four months of intense talks complicated by concerns about the sharing of intellectual property as Renault sought tie-ups with companies outside their alliance.

Renault’s board approved the deal on Sunday night, according to a source. Nissan’s board also approved it early on Monday, the source said.

Investors and analysts will be looking for more clarity on how the trust in which Renault will place the bulk of its Nissan stake will operate.

“There is absolutely no word about what’s going to happen to those shares in the trust,” said CLSA analyst Christopher Richter. “It seems they’re all avoiding the issue of Nissan buying them back which I think would be the best thing for all parties involved.”

Richter said Renault’s brand is not seen as being a strong brand, so it may be tough for the French carmaker to raise money for Ampere.

“I wonder once this thing goes into the market how much money you would really raise, he said. “That’s why I think they’re going to push Nissan to pay too much.”

The unequal relationship between the two carmakers had long been a source of friction among Nissan executives.

While Renault bailed out Nissan two decades ago, it is the smaller automaker by sales.

CLSA’s Richter said that the revamped alliance could enable Nissan and Renault to work together on R&D, shared costs and a few shared products “with a little bit less rancor and acrimony between them,” but added that Honda and General Motors <GM.N> have built a partnership that includes jointly developing lower-cost EVs together without any need for a capital relationship.

“One almost wonders what’s the point of them having any stake in either one, any stake at all,” Richter said.



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