Americas News
Oil Mixed As Economies Reopen And Optimism Builds For Gradual Recovery
Despite the now-standard media headlines and health officials providing no sense of proportion to pandemic numbers and thus maintaining the fear that has gripped the public for over a month now, the growing sense of optimism around the reopening of economies caused oil traders to mitigate crude price losses on Tuesday.
West Texas Intermediate fell 44 cents to settle at $12.34 per barrel, while Brent gained 47 cents to settle at $20.46.
Amrita Sen, chief oil analyst at Energy Aspects, noted that oil running out of inventory space - which has driven crude prices dramatically downward of late - is "pretty much at the end of that process" and that by June "the supply response that is kickstarting now will overtake the demand decline and we will restart the rebalancing process."
Bjornar Tonhaugen, head of oil markets at Rystad Energy, remarked, "A ramp up in business activity will give a boost in U.S. domestic oil demand, which can postpone filling the country's oil storage a bit further in the future."
He added as a cautionary note, "U.S. reopening industrial activity can give a temporary boost to prices as traders need space to breath, but we don't expect the levels to last: oil prices will likely average at USD $20 per barrel in the second quarter, with the lowest levels coming sometime in May."
Prices were pressured on Monday when the United States Oil Fund said it would sell all of its contracts for June delivery beginning Monday, in favour of longer-term contracts, and this caused Cailin Birch, global economist at The Economist Intelligence Unit, to remark that "The move [by the USO] is a recognition of the bleak prospects for the US oil sector in May and June."
Still, there no doubting a budding sense of optimism within the business world, fuelled partly by mounting data that the coronavirus pandemic may be far less fatal than originally thought, ongoing progress in treatment and vaccine development, and the fact that New Zealand has largely reopened its economy, following European countries such as Germany, Czech Republic, and other locales.
Adding to the nascent momentum of business leaders in North America demanding a return to business was William Barr, attorney general for the U.S., who on Monday issued a memorandum in which he directed the Justice Department to take legal action against certain coronavirus lockdown rules imposed by states.
The memorandum in part stated, "The Constitution also forbids, in certain circumstances, discrimination against disfavoured speech and undue interference with the national economy."
It also pointed out that "If a state or local ordinance crosses the line from an appropriate exercise of authority to stop the spread of COVID19 into an overbearing infringement of constitutional and statutory protections, the Department of Justice may have an obligation to address that overreach in federal court."
Meanwhile on the medical front, the Centers for Disease Control and Prevention (CDC) has pinpointed severe obesity as being one of the groups most "at risk for complications" when it comes to coronavirus; Dr. Jennifer Lighter, hospital epidemiologist at New York University, told media that "In individuals less than 60 years old, they were two to three times more likely to be admitted to the hospital or ICU, and for the morbidly obese, fatality is three times the rate than for non-obese COVID-infected individuals."
