Good Covid News Or Promising IEA Numbers Cause Crude Prices To Rebound

by Ship & Bunker News Team
Friday July 10, 2020

Demonstrating yet again that crude trading patterns are all over the map, oil on Friday climbed more than 2 percent because, according to Reuters, the International Energy Agency raised its demand forecast to 92.1 million barrels per day (bpd), up 400,000 bpd from its outlook last month.

Oil was also supported by more economic data, including a record June payrolls addition, indicating a revival in the U.S. economy.

But as is becoming the norm, the gains were said to be limited by fears that the coronavirus is out of control in the U.S. and will lead to more lockdowns; indeed, the IEA while raising its forecast stated, "While the oil market has undoubtedly made progress ... the large, and in some countries, accelerating number of COVID-19 cases is a disturbing reminder that the pandemic is not under control and the risk to our market outlook is almost certainly to the downside."

Brent on Friday settled up 89 cents, or 2 percent, at $43.24 per barrel, and West Texas Intermediate settled up 93 cents, or 2.4 percent, at $40.55 per barrel; for the week, WTI remained steady, while Brent gained 1 percent.

Bloomberg had a slightly different opinion about why crude made gains on Friday: it theorized that  market followed stocks higher after Gilead Sciences Inc. said its remdesivir treatment cut Covid-19 mortality risk by 62 percent.

Michael Hiley, head of over-the-counter energy trading at LPS Futures, remarked,"If there's one positive today concerning oil and the virus, it's the news about remdesivir; still, you can't help but try and dig into the new virus numbers that come out each day."

Curiously, the disclosure about remdesivir is hardly news: its efficacy has been widely reported for weeks, and the most recent news regarding the drug is that Gilead is launching trials on an inhaled form of remdesivir that could be used to treat Covid infected people who don't require hospitalization.

In fact, a host of promising developments regarding Covid went completely unnoticed by crude traders on Friday, although admittedly it would have taken considerable effort wading past the daunting volume of negative headlines to find them. 

Case in point: David Rach, a Maryland-based graduate immunology student, was reportedly the first person to be successfully vaccinated against the coronavirus with a formula from Pfizer and BNioTech; early indications show the vaccine is working by stimulating the growth of antibodies at rates equal or higher to those who have the illness.

If the trial proves successful, Pfizer said it will produce 100 million doses before the end of the year and more than 1 billion doses next year.

Also, Dr. Katarina Lindley, Texas-based president of the American College of Osteopathic Family Physicians, became yet another medical expert to suggest that people should dwell less on media fear-mongering and more on their daily lives: she stated, "The messaging from leadership and the medical community should be clear: 'Yes, we have increase in the cases but we do not have an increase in mortality'....we need to stop fearing the disease and instead respect it - and learn to live with it.

"It is here to stay, but we should not allow it to take our freedom and liberties away."