Americas News
Oil Up Again As Demand Climbs And U.S. Shale Producers Reverse Cuts
The expectation that crude producers later this week will agree to extend production cuts, along with economies around the world slowly recovering from the government-imposed Coronavirus lockdowns, proved once again to be the winning formula for oil prices, which on Tuesday rose by over 3 percent.
Andy Lipow, president of Lipow Oil Associates, explained, "There's the anticipation that OPEC+ [the Organization of the Petroleum Exporting Countries] is going to agree to extend their current levels for another two months, and at the same time, the market anticipates that the reopening of economies around the world will increase demand and will get us in a position such that, by August, the oil market will be in balance."
Accordingly, Brent on Tuesday settled up $1.25, or 3.3 percent, at $39.57 per barrel, while West Texas Intermediate crude settled up $1.37, or 3.9 percent, at $36.81 per barrel.
It was also reported on Tuesday that U.S. shale producers are beginning to reverse production cuts as prices recover from historic lows: Parsley Energy Inc. and EOG Resources Inc. (the latter one of the country's largest shale producers) disclosed plans to restore some or all of their output cuts, while energy officials in North Dakota reduced an estimate of production shut-ins by 7 percent.
But as far as some oil producers are concerned, while demand may be on the rebound, the long-term fate of fossil fuel is grim: noting that the coronavirus cut fuel demand by roughly 30 percent worldwide at peak, Mark Little, CEO of Suncor, told media that "The temporary economic lockdown triggered by the 2020 pandemic is giving us a glimpse into a not-too-distant future where the transformation of our energy system could disrupt demand on a similar scale."
He cited a shift to electric vehicles and other low-carbon technologies as the disruptors and added, "we have to take advantage of new opportunities that offer attractive growth prospects."
As for the virus that caused world governments to plunge economies into a tailspin by mandating the now-questionable lockdown measures, it too may eventually be a nasty memory: on the heels of reports that the latest mutation of the virus is nowhere near as deadly as the initial incarnation comes news from Col. Wendy Sammons-Jackson, director of the Military Infectious Disease Research Program in the U.S., that it was "reasonable to expect that there will be some form of a vaccine" available in some parts of North America within the year.
Another researcher, Dr. Kayvon Modjarrad, explaiend that scientists were learning about the virus at a faster pace than other infectious diseases in the past, "So, going to a vaccine in a matter of months from concept all the way to Phase Three clinical trials and potentially licensure is unprecedented - but in this case I think very much is possible."
The disclosure was accompanied by reports on Tuesday that in Wuhan, China, where the pandemic began, there are no new cases of people suffering from the virus after testing almost its entire population, and 300 asymptomatic carriers all deemed to be not infectious.
