숏

Peak of the earnings season is close and million bpd from Libya

The earnings season in the US is approaching its peak (it will happen on Thursday). But it is already clear that it will not be a super-breakthrough, as many believed on the eve of its launch. Yes, analysts' expectations were again greatly underestimated, as a result the companies demonstrate results better than forecasts. But better than forecasts does not mean that the data itself is positive. It is much more correct to use the same period of the last year as a basis for comparison. This will give a more or less real idea of what is happening with the company, taking into account the seasonality factor typical for a number of businesses.

For example, BP's profit in the third quarter increased by 100%+ compared to the second quarter. Which without a doubt looks very impressive. But there is one "but". The current $ 100 million in profit compared to $ 2.3 billion in Q3 2019 is not 100% + growth, but a 95% + drop. So it turns out there is nothing to be happy about.

But let’s get back to earnigns season. Caterpillar's revenue fell by almost a quarter, while profits fell more than 50%. Restaurant Brands International (Burger King owner) revenues have declined, so have profits. Not even Pfizer was pleased, with Q3 2020 revenues of $ 12.1 billion, down $ 549 million, or 4%, from the previous year's quarter.

In general, such earnings cannot be called breakthrough. This means that sales on the US stock market do not lose their relevance.

Libya has been the main newsmaker on the oil market for the last 2-3 weeks. During this period, the country has increased production from 100K b / d to 500K b / d (that is, production increased by 5 times). But this seemed not enough to Libya, and just a few days ago the National Oil Company announced that it plans to increase production to 1 million b / d within a month. Considering that hopes for an increase in demand in the current pandemic conditions are fading, a sharp increase in production by Libya is a very powerful bearish signal for the oil market. So keep on selling oil.

In terms of news, the present day is interesting because of the announcement of the results of the Bank of Canada meeting. The rate will clearly not be changed and the maximum that can be expected is concerned comments about the uncertainty associated with the current pandemic situation.