Americas News
Oil Down As Covid Sentiment Outweighs Good Economic Data
Following several sessions of modest gains capped by worries associated with rising Covid infection rates, crude on Friday experienced modest losses as these fears eclipsed good economic news that unfolded throughout the week.
Brent declined 20 cents at $41.73 per barrel, while West Texas Intermediate lost 24 cents to $40.07; both benchmarks were on track for a weekly decline of over 3 percent.
John Kilduff, founding partner at Again Capital, remarked, "There's a lid on this market to the extent that Covid-19 keeps rearing its ugly head in different spots; we just can't get this demand perked back up."
Friday's trading activity was said to be influenced by New York City considering renewed shutdown mandates, however, many U.S. states are seeing infection declines (restrictions in previously hard-hit Florida and New Jersey are being removed in near-entirety); similarly, while rising infections in India caused traders to worry that it is hindering industrial activity, many Asian countries with reduced infection rates are rebounding
Still, the damage to oil demand caused by the government-mandated Covid lockdowns earlier this year is unprecedented and was revealed on Friday with a survey of shipping analysts by Bloomberg, which estimated that the industry's largest tankers next year will earn 8 percent less than they were anticipating back in May.
Phil Streible, chief market strategist at Blue Line Futures, cut to the chase on Friday by stating that only the introduction of a reliable Covid vaccine will cause widespread re-openings and a meaningful increase in travel: "That's when you're going to start to see demand pick up" and prices rally.
On that score, vaccine progress has been consistent and unwavering in the goal towards widespread dissemination at the end of this year or early next: five vaccines have already been approved for early or limited use; 11 more considered safe and effective are in the final large-scale tests; and 41 others are in various testing stages.
Meanwhile, economic data supporting demand continues to be promising: S&P Global Economics expects a full-year U.S. GDP contraction of 4 percent (down from an anticipated 5 percent drop) and a modest 3.9 percent growth in 2021; it also on Friday stated that the eurozone economy has recovered faster than expected and now forecasts GDP will fall only by 7.4 percent this year and rebound by 6.1 percent next year.
