Panicked Traders Cause More Crude Losses Despite Possible Third Quarter Economic Uptick

Living up to their reputation for being governed by sentiment and fear, crude traders on Tuesday caused another price decline, this time slightly over 9 percent, on the persistent uncertainty of whether Russia and Saudi Arabia will strike a deal to limit output - as well as polls suggesting the global recession caused by government action against the coronavirus may be more severe than initially thought.

West Texas Intermediate fell 9.39 percent, or $2.45, to settle at $23.63 per barrel, while Brent fell 3.57 percent to settle at $31.87 per barrel.

Fatih Birol, executive director of the International Energy Agency, worried that this Thursday's emergency meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies will be ineffective in stabilizing crude market supply and demand: he said a deal might put an "upbeat mood in the markets for a couple of days [or] couple of weeks, but people will realize there is still a huge amount of oil in the market."

Tuesday's trading activity was said to also have been influenced by an April 1-3 Reuters snap poll of over 50 economists in North America, Europe, and Asia showing the global economy would contract 1.2 percent this year compared to a 1.6 percent expansion predicted in a poll just three weeks ago.

Completely ignored by traders was most of the economists stating in the very same poll that the blow will be punishing but temporary, with medians showing a more vigorous rebound in the third quarter.

Fears from both the trading and analytical communities aside, those hit hardest by the demand shock caused by world governments shutting down businesses to slow the coronavirus pandemic - namely, energy producers - remain pragmatic and committed to weathering the storm.

Darren Woods, CEO of Exxon, told media on Tuesday that his company has cut capital spending by 30 percent and will continue to protect its shareholders: "A lot of our shareholders are retail shareholders - people who depend on that dividend - so we've been pretty committed to maintaining that and if necessary in the short-term using the balance sheet to support it."

Meanwhile, less-reported disclosures on Tuesday should give the energy community as well as industry overall hope that demand for travel will not only resume once the pandemic has run its course but flourish.

The Huangshan Mountain range in the Anhui province of China was mobbed by over 20,000 visitors over the weekend after virus restrictions were eased.

But arguably the most promising news on the virus front on Tuesday came from an influential model developed by IHME that tracks the pandemic in the U.S.

As of Monday, the model predicted the virus will kill 81,766 people in the U.S. over the next four months, with just under 141,000 hospital beds being needed; that's about 12,000 fewer deaths and 121,000 fewer hospital beds than the model estimated on Thursday.

Patients in intensive care are now expected to have longer stays than previously predicted, while those with milder cases are predicted to have shorter stays.

To put things into perspective, Worldometer reports 81,507 virus deaths globally from January 1 to April 7; during the same time period the seasonal flu has killed 129,924 people, HIV/AIDS has killed 449,151 people; malaria has killed 262,075 people, and cancer has killed 2,194,362 people.