Americas News
Oil Plunges Again, Analysts Say Ending The Virus Lockdowns Is The Solution
As anticipated last week by many analysts, an increasing lack of available crude storage to deal with the demand collapse caused by global governments' reaction to the coronavirus caused another major round of losses for the commodity on Monday, with the U.S. benchmark plunging 25 percent.
Kpler data revealed that fuel demand was down 30 percent globally and roughly 85 percent of worldwide onshore storage was full as of last week, caused investors to flee and driving West Texas Intermediate down by $4.16, or 24.6 percent, to settle at $12.78 per barrel; Brent slid $1.45, or 6.8 percent, to settle at $19.99 per barrel.
However, traders pointed out that prices dropped Monday partly because retail investment vehicles are shifting investments away from front month June contracts to avoid getting trapped as many did a week ago, when the oil contract dropped to minus $37.63 per barrel.
Steve Chiavarone, vice president at Federated Hermes, echoed the sentiments of a growing number of people demanding an end to the coronavirus lockdowns by stating, "I think what the stocks are trading on ... is the virus data because the way this is ultimately going to get solved is, yes, production cuts, but [also] getting people back to work, getting the economy running and increasing the demand for oil."
He added that "I think virus data that shows that maybe we're past the peak: we're able to look through, see that reopening of the economy, see that increase in demand, and that's what's being anticipated in the share prices."
Sharing this sentiment was Craig Johnson, senior technical research analyst at Piper Sandler, who noted the peculiar discrepancy between alarmist media headlines regarding the virus and healthy trading: "I've never seen such negative headlines and yet we continue to see the XLE trade higher."
He added that with Chevron and ExxonMobil, the two largest holdings in the XLE, reporting last week, "that's going to be a key tell to say how much of the negativity has already been priced into this sector; to me, it looks like a lot already has."
Meanwhile, media continues to under report promising news on the coronavirus treatment/vaccine development front, case in point: biotech firm CytoDyn on Monday reporting "impressive" results from leronlimab, a viral-entry inhibitor that has reduced the plasma viral load and restored the immune system of COVID-19 patients, according to data from a small group of patients.
But an April 24 Wall Street Journal story suggested that media will continue to spread misinformation regarding the virus, even though findings from respected scientists indicate the pandemic is quite different than sensationalist headlines make it out to be.
The story cited as an example John Ioannidis, a professor at the Stanford School of Medicine, ranked as among the world's 100 most-cited scientists and who concluded that the U.S. coronavirus fatality rate could be as low as 0.025 percent to 0.625 percent or as high as 0.05 percent to 1 percent, comparable to that of seasonal flu.
Ioannidis stated, "If that is the true rate, locking down the world with potentially tremendous social and financial consequences may be totally irrational."
Ioannidis headed the recent study on the prevalence of coronavirus antibodies in Santa Clara County, which concluded that the number of infected people was 50 to 85 times higher than originally thought, meaning the fatality rate for the virus was between 0.12 and 0.2 percent.
This is consistent with the fatality rate of infected passengers aboard the Diamond Princess cruise ship that was quarantined in February and also in line with more recent studies from the Los Angeles County Department of Public Health and from New York showing the virus to be up to 55 times and more than 10 times more prevalent in those cities respectively.
Ioannidis rejected the arguments from health care experts and governments that "'lockdowns save the world': I think that they're immature.....they may have worked in some cases, they may have had no effect in others, and they may have been damaging still in others."
