This Morning in Metals: EIA estimates fuel inventory to build by 11.5M b/d in Q2

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This morning in metals news, the Energy Information Administration (EIA) released fuel inventory build projections for Q2, Mexico is preparing to ease its coronavirus restrictions and the U.S. recently announced a move targeting China’s Huawei’s.

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EIA forecasts inventory build of 11.5 million b/d

Oil inventories have been rising rapidly amid the COVID-19 pandemic and the subsequent plunge in consumer demand.

According to the Energy Information Administration (EIA), crude oil inventory built up by 6.6 million barrels per day in Q1 and is forecast to hit 11.5 million barrels per day in Q2.

Mexico gets set to reopen economy

Mexico published guidelines for the restart of its automotive, mining and construction sectors, Reuters reported, as the country looks to emerge from the most stringent stage of COVID-19 restrictions.

The news is particularly significant for the highly integrated North American auto sector. According to the Center for Automotive Research, Mexico provided 37% of U.S. auto part imports in 2017.

U.S. targets Huawei

Chinese telecommunications firm Huawei has been one of many flashpoints in the ongoing trade war between the U.S. and China.

In the most recent development, the U.S. announced plans to directly target the Chinese firm.

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“The Bureau of Industry and Security (BIS) today announced plans to protect U.S. national security by restricting Huawei’s ability to use U.S. technology and software to design and manufacture its semiconductors abroad,” the Department of Commerce announced. “This announcement cuts off Huawei’s efforts to undermine U.S. export controls. BIS is amending its longstanding foreign-produced direct product rule and the Entity List to narrowly and strategically target Huawei’s acquisition of semiconductors that are the direct product of certain U.S. software and technology.

“Since 2019 when BIS added Huawei Technologies and 114 of its overseas-related affiliates to the Entity List, companies wishing to export U.S. items were required to obtain a license. However, Huawei has continued to use U.S. software and technology to design semiconductors, undermining the national security and foreign policy purposes of the Entity List by commissioning their production in overseas foundries using U.S. equipment.”

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