Americas News
Huge Surge In Crude Prices As Vehicular Traffic And Back To Work Movement Builds
Not only are the coronavirus lockdowns throughout the world gradually easing, but vehicular activity is also on the rebound, and these along with other positive disclosures on Tuesday galvanized crude traders, who once again caused oil prices to soar - this time by a massive 20.5 percent.
Brent shot up $3.77, or 13.9 percent, to settle at $30.97 per barrel, while West Texas Intermediate skyrocketed $4.17, or 20.5 percent, to close at $24.56 per barrel.
Despite health experts warning that reopening could cause virus infections rates to climb again, a host of countries decided that life must go on anyway to save a devastated world economy, and on Tuesday Spain, Nigeria, and India, as well as more U.S. states including Ohio began allowing people to return to work and opened up construction sites, parks, and libraries.
Meanwhile, cars have been rolling off some production lines in Germany, Sweden, and Slovakia, and television production will soon resume in Australia.
None of this pleased the World Health Organization, which has come under intense criticism for downplaying the severity of the virus when it first broke out in China; it issued a stern warning that easing the lockdowns amounts to "the beginning of the next phase" of the pandemic.
Regardless of the growing disagreement between back to work advocates and those wishing to remain at home until the pandemic vanishes, the overall mood in trading circles was undeniably upbeat and summarized by Phil Flynn, senior market analyst at Price Futures Group Inc., who said, "The market is starting to realize that demand destruction has been terrible, but we're reopening and demand is going to get better."
That was evident in the latest American Petroleum Institute report, which on Tuesday showed that gasoline stocks fell 2.2 million barrels, compared with analysts' expectations for a 43,000 barrel increase.
Better still, Morgan Stanley said the peak of crude oversupply in global markets had likely been reached and a storage crunch was abating: "Inventories have built but not quite as strongly as feared: with social distancing measures ramped up in March ... the observed inventory increases have not been quite as strong as feared."
More good news came in the form of UBS, whose analysts wrote in a note on Tuesday that they "expect the oil market to be balanced in third quarter and undersupplied in fourth quarter, and Brent to recover to $43 per barrel by end-2020 and to $55 per barrel by mid-2021.
"We still expect oil demand to contract strongly this quarter, though not as much as we did before; we now estimate minus 15 million barrels per day (bpd) year on year for 2Q, versus minus 20 million bpd previously."
Of course, the severity of governments' response to the virus means that hardships stiil lie ahead: all-important air traffic is not expected to rebound soon, which will slow the recovery for fuel demand.
As the economy began reopening to the consternation of health officials, it was reported by the Mayo Clinic on Tuesday that researchers have created an antibody "that neutralizes SARS-CoV-2" in cells, offering the potential for prevention and treatment.
The researchers stated that "this antibody – either alone or in combination – offers the potential to prevent and/or treat COVID-19, and possibly also other future emerging diseases in humans caused by viruses from the Sarbecovirus subgenus."
