Americas News
Emerging Demand Recovery Breaks Oil's Weekly Losing Streak As Criticism Of Virus Lockdowns Mounts
'Bullish' is hardly the word used to describe the oil market since the government lockdowns in reaction to the coronavirus pandemic gutted demand, but that's exactly the word Goldman Sachs Commodities Research used on Friday in the wake of crude prices enjoying another round of gains.
U.S. energy firms cut oil rigs for a seventh week in a row, combined with lockdowns being relaxed in a growing number of countries around the world, were credited for West Texas Intermediate on Friday climbing 4.99 percent, or 94 cents, to settle at $19.78 per barrel; Brent eased 7 cents to $26.31.
Crude's slow recovery over the past five sessions ended three consecutive weeks of losses, with Brent on track for an 20 percent gain and WTI heading for a 16 percent increase.
More encouraging than this merely being a result of sentiment is evidence that virus-weary people around the world are taking to the roads in increasing numbers: "Countries are emerging from lockdown, boosting demand just when OPEC+ cuts are kicking in and producers elsewhere are cutting output," stated a BofA Global Research report in reference to the Organization of the Petroleum Exporting Countries agreeing to slash output by 9.7 million barrels per day (bpd), beginning Friday.
Stephen Innes, chief market strategist at AxiCorp, suggested that the worst of the six-week long lockdown nightmare might be over: "This is a second straight week of inventory and product demand figures suggesting a bottoming of the U.S. market."
Michael Wirth, CEO of Chevron, which will cut between 200,000 and 300,000 barrels of oil-equivalent production in May, and between 200,000 and 400,000 barrels of oil-equivalent production in June, said that although the second quarter will be "very, very tough....as we begin to see things move forward and economies begin to pick up again, demand will gradually return."
As for Goldman, on Friday it raised its second-quarter and full-year forecasts for Brent crude futures to $25 and $35.8 respectively, citing signs of improvement in fundamentals with quickly declining supplies and improving demand.
The bank stated in a note, "It now appears likely that the market is passing its test on storage capacity, due to improving fundamentals, new creative forms of storage being put in place and a likely c.1 million barrels per day (mbpd) smaller May surplus than previously expected."
It added, "We caution that the oil bull market that we forecast will take time and require patience."
Meanwhile, the initiative that caused crude prices to drop and cost millions of people their jobs - the lockdowns - are coming under increasing scrutiny in the U.S. as that country prepares to return to a semblance of normalcy.
Under special scrutiny is New York governor Andrew Cuomo, one of North America's strongest lockdown advocates and who is now being blamed for spending hundreds of millions of dollars on beds and ventilators that were never used and recruiting armed forces aid that is now regarded as a waste of resources.
Dr. David Samadi, a New York-based surgeon, told media that driving Cuomo, other politicians and health officials were profoundly flawed computer models: "These models gave a horrifying prediction that suggested COVID-19 could kill anywhere from 200,000 to 1.7 million Americans; currently, it looks to be more like 60,000 to 65,000 deaths.
"While any American life lost to this virus is a shame, the death and infection rate is looking not quite so bleak as it was in the beginning."
In the spirit of recognizing that the world is teeming with disease but life must go on anyway, Tennessee on Friday allowed businesses in 89 counties to reopen despite 369 new cases of COVID-19 recorded on April 30; senator Marsha Blackburn remarked, "Individuals who are healthy, individuals who are not high-risk, individuals who have recovered from COVID-19 need the opportunity to be able to go back to work."
Meanwhile, commodities trading could be boosted over the next few days by Friday's news that the Food and Drug Administration has authorized the emergency use of Gilead Science's antiviral drug remdesivir to treat coronavirus patients, following promising results of a clinical study.
