Americas News
Oil Prices Both Buoyed and Capped By Pandemic-Related Developments
The coronavirus pandemic played a dual role in influencing oil prices on Monday: on one hand hopes that the U.S. economy will be revitalized by another round of stimulus efforts resulted in gains for the commodity; but on the other hand the continued rising infection rates in that country capped the gains.
Also, the closures of Chinese and U.S. consulates in Houston and Chengdu have reportedly steered investors away from riskier assets such as oil futures and toward gold and bonds.
Expectations that the White House would unveil an additional $1-trillion coronavirus aid package caused Brent to settle up 7 cents at $43.41 per barrel, while West Texas Intermediate settled up 31 cents to $41.60 per barrel.
Phil Flynn, senior market analyst at Price Futures Group Inc., reasoned, "If we can put more money into the pockets of consumers, they're going to spend it on goods and services; that should lead to more gasoline demand, more travel and more shopping."
As July draws towards a close, Brent is on track for a fourth straight monthly gain and WTI is set to rise for a third month, both benchmarks buoyed considerably by the efforts of the Organization of the Petroleum Exporting Countries (OPEC) to maintain supply and demand balance with its output cuts.
Still, the energy sector remains in shock over the effect of the government imposed economic shutdowns earlier this year in response to the virus: analysts and Refinitiv Eikon data on Monday revealed that the expected second quarter rare losses for BP (BP.L), Chevron, Eni, Exxon Mobil, Royal Dutch Shell, and Total will be unprecedented; Shell for one has provided an average estimate of analysts' expectations of its quarterly adjusted earnings, slumping to its first-ever loss at minus $674 million.
Smaller firms of course are struggling to stay afloat, and on Monday Permian oil driller Rosehill Resources Inc. filed for bankruptcy protection - but expects to continue operating "without material disruption" as its debt is restructured.
Meanwhile, the dissemination of Covid vaccines that will presumably end the lodestone to oil prices continues to draw closer, with a slew of news on Monday ranging from Moderna's candidate moving into late-stage trial (the final hurdle prior to regulatory approval), to business software group SAP being selected to help distribute the vaccine, and Emergent BioSolutions Inc. signing a $174 million agreement with AstraZeneca to develop and manufacture the British drugmaker's vaccine candidate.
