Meanwhile, shale drillers say they might consider easing cutbacks in the near future: File Image/PixaBay
While optimism about economies reviving remains high, oil on Wednesday ended its five day winning streak as traders resumed their worries about crude oversupply, fuelled by U.S. Energy Information Administration data showing that for the week ending May 1 inventories rose by 4.6 million barrels.
That was still smaller than the 8.67 million barrels build analysts had been expecting, but nonetheless West Texas Intermediate shed 2.3 percent, or 57 cents, to settle at $23.99 per barrel; Brent settled 4 percent lower at $29.72.
Jeff Kilburg, CEO at KKM Financial, said Wednesday's trading could also have been merely a case of investors locking in gains after the commodity soared more than 50 percent over the last week.
We would tend to agree that the market has bottomed out
The overall tone within trading and analytical circles of cautious optimism remained, though, tempered by realistic expectations of recovery in the wake of governments around the world closing the economy and ordering people to stay home to minimize the impact of the coronavirus.
Bjornar Tonhaugen, head of oil markets at Rystad Energy, noted that "Demand, which indeed now is on the recovery road, is not yet enough to balance the produced oil and that oil has to go somewhere."
JBC Energy analysts remarked, "We would tend to agree that the market has bottomed out, but would caution against getting overly excited about this....the data trundling in for April really is shockingly bad."
Meanwhile, U.S. shale drillers indicated they would consider reversing some of their output cuts if prices recover at the high $20 or low $30 level: Tavis Stice, CEO of Diamondback Energy Inc., told media that "As we evolve as an industry into this new world order, I think it's going to look a lot different than what we've historically been accustomed to."
As for the battle in North America between those demanding a return to work and critics who insist more time is needed for coronavirus treatment and vaccine development, the legal community in the U.S, at least is siding with citizenry and cracking down on what it perceives to be a governmental abuse of power.
This became apparent again on Wednesday after Dallas salon owner Shelly Luther was jailed for keeping her business open in violation of the state's stay at home orders: Texas attorney general Ken Paxton called the incarceration "a misguided abuse of power, especially considering Dallas County released real criminals to protect them from COVID-19"; he also lauded Luther for being motivated to keep her workers employed and care for her family.
The state subsequently announced that hair salons, barbershops, and tanning salons will be allowed to open beginning on Friday instead of mid-May.
John Kennedy, Senate Appropriations Committee member, reminded media that "The reason we shut down the economy to begin with was so that our health care delivery system would not be overwhelmed; it wasn't, [and] we are even better prepared today."
Therefore, he added, "We have to protect public health, but part of protecting public health is getting this economy back going again.... I think that we can do it while protecting human life; I believe that.
"Does it mean that we aren't going to have some new hotspots? We will, but we can deal with them better today than ... six weeks ago."
As for the coronavirus itself, Dr. Ramin Oskoui, a cardiologist and CEO of Foxhall Cardiology, reacted to a new Arizona State University suggesting that COVID-19 is mutating into weaker forms by stating, "This is how they go away: they typically mutate, as well as herd immunity, to attenuate weaker strains that no longer make people so ill."