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| View in browser By Charles Riley • Friday, April 3 Good morning. In today's newsletter: Turmoil in oil markets, and another dire report on the US jobs market. Plus, coronavirus stimulus will send national debt through the roof. US stock futures were lower after markets closed with gains on Thursday. Benchmark European indexes lost ground in early trading, while most stocks in Asia closed out the week with losses. ➡️ BREAKING: OPEC will meet on Monday with Russia and other oil producers in the hope of agreeing supply cuts and ending a brutal price war. ▸ Forwarded this newsletter? Want global markets news and analysis from CNN Business reporters every morning? You can sign up here. What's happening now in markets: ▼ Dow futures 21,038 (-1.1%) ▼ S&P futures 2,490 (-1%) ▼ Nasdaq futures 7,550 (-1%) ▼ Gold $1,630.80 (-0.4%) ▲US oil $26.37 (+1%) MARKET DATA AS OF 7:05 AM ET ADVERTISEMENT MARKET FLASH Oil markets in turmoil President Donald Trump set off a record spike for US crude futures on Thursday with a tweet saying he expected Russia and Saudi Arabia to cut production by as much as 15 million barrels per day. US oil prices soared before closing with a record single-day record gain of 25%. Why such enthusiasm? Russia and Saudi Arabia are locked in a brutal price war, and Coordinated Production Cuts could soak up excess supply and boost prices. Trump, who needs prices to rise significantly to prevent a wave of bankruptcies among US shale producers, got what he wanted. But there were reasons to question the veracity of what the president tweeted. Problem 1: Trump said he had just spoken to his friend, the crown prince of Saudi Arabia, who had spoken to Russian President Vladimir Putin. But the Kremlin denied that such a phone call had taken place. Problem 2: The American president said that he expects Russia and Saudi Arabia to cut production by as many as 10 million barrels per day, and potentially up to 15 million barrels per day. But the lower end of that range is equal to all of Saudi Arabia's production. The big picture? Saudi Arabia and Russia have been locked in their price war since early March, flooding the oil market with cheap crude just as demand is cratering because of the coronavirus pandemic. Crude has crashed to 18-year lows, crushing American oil companies and energy stocks. Many analysts are skeptical that Russia and Saudi Arabia are ready to set aside their differences, especially with so many US shale producers under extreme pressure from low oil prices. But the coronavirus pandemic may be changing the rules of the game. "Russia's objective was to hurt US shale," said Stephen Innes, the chief global markets strategist at AxiCorp. "Well, that's all fine and dandy when Covid-19 was thought to be a brief health scare, but now the virus's economic hit is morphing into the most significant ... since the 'Great Depression.'" What happens next: OPEC will hold an emergency meeting Monday, called by Saudi Arabia, according to two senior sources at OPEC. Other producers who are not OPEC members will be invited to the meeting, the sources said. The question is whether OPEC and allied producers will agree to resume production cuts, and if so, at what scale. Some analysts think Russia won't agree to cut without a similar commitment from the United States. US participation in coordinated production cuts would be ... tricky. Doing so runs counter to the country's free market ethos, and it's not clear whether the president would have legal authority to order hundreds of producers to limit their output. Then again, coronavirus may be changing the rules of the game. Some US oil producers have urged officials in Texas to impose caps on the state's oil production. The Railroad Commission of Texas, which regulates the state's energy industry, hasn't exercised that power in more than 40 years. Ryan Sitton, a commissioner at the regulator, said Thursday he had a "great conversation" with Russian Energy Minister Alexander Novak in which they discussed the need to remove 10 million barrels per day from global supply. Prices continued to advance Friday, recovering some of the massive plunge seen over the past month. Brent crude futures, the world's benchmark, were trading more than 6% higher at $31.56 a barrel. Stay tuned: Trump is meeting with US oil producers on Friday. Putin is meeting the heads of major Russian energy companies. VOICES What one small business owner needs "We need more help from the government, including grants large enough to help us pay our bills and enabling us to explore ways to let our factory be part of the fight against the virus." ALEX DABAGH, THE OWNER OF PIETRO HANDBAGS Read more from CNN Business LABOR MONITOR The US jobs market is under huge pressure The past three weeks have marked one of the most devastating periods in history for the American job market. The chart shown above is almost unbelievable — it shows that 6.6 million workers filed for unemployment benefits last week, double the previous record. At 8:30 a.m. ET, the US government will release the first monthly jobs report of the coronavirus era. Economists polled by Refinitiv expect a drop of 100,000 jobs in March, bringing the 10-year stretch of continuous increases in employment numbers to a screeching halt. Big picture: The March report's drop in jobs "will likely be dwarfed by job losses closer to 10 million in April, with the unemployment rate rising above 10%," economists at Citi said in a research note. The next jobs report is due on May 8, and will be a far better measure of the pandemic's impact. James Bullard, president of the Federal Reserve of St. Louis, said the unemployment rate could soar as high as 30%. "Sadly we're only at the start of this process. There are around 18 million jobs, mostly in the service sector, at risk from social distancing," said James McCann, senior global economist at Aberdeen Standard Investments. | ||||
