Meanwhile, Asian countries are driving a boom in recovery: File Image/PixaBay
Oil prices on Tuesday enjoyed a modest uptick due to the Organization of the Petroleum Exporting Countries (OPEC) and its allies on Saturday agreeing to extend its 9.7 million barrels per day (bpd) cuts until the end of July.
Optimism over this extension was said to have offset concerns that rising coronavirus cases in central America, where the pandemic has yet to peak, could harm the recent and fragile recovery in oil demand.
Brent rose 38 cents to settle at $41.18 per barrel, while West Texas Intermediate rose 75 cents to end at $38.94 per barrel.
Tsutomu Sugimori, president, Petroleum Association of Japan
We anticipate oil prices will be traded at $40s per barrel if demand picks up
Tsutomu Sugimori, president of the Petroleum Association of Japan, summarized the sentiment of those in the energy sector overall by stating, "The future of the COVID-19 pandemic is still highly unpredictable, but we anticipate oil prices will be traded at $40s per barrel if demand picks up with a resumption of global economic activities while demand and supply are headed toward an equilibrium."
In one part of the world, that demand appears to be already booming: Sri Paravaikkarasu, head of Asia oil research at FGE, told media on Tuesday that refiners in China "have already ramped up crude runs significantly in the last two months, [and] the improvement in domestic demand will see other countries such as India, Indonesia, Vietnam gradually increase crude processing over the next few months."
He added that Indian Oil Corp could see the average operating rate of its plants reach 85 percent in June, up from 39 percent in April, and that demand will soon rise in South Korea and Australia "where the [coronavirus] cases are broadly under check."
Still, some analysts such as Goldman Sachs believe the recent oil price rally has gotten "ahead of fundamentals" and this combined with health authorities warning of a second wave of the coronavirus could cause a 15-20 percent correction.
Sugimori's remarks about the unpredictability of the pandemic are not helped by health authorities changing their opinions about how to minimize risk and the nature of COVID-19 itself, and the latest flip flip came on Tuesday just one day after the World Health Organization declared that it was "very rare" for asymptomatic people to spread the virus - which itself was a stark reversal of previous beliefs.
On Tuesday WHO flipped flopped yet again, with Dr. Maria Van Kerkhoven stating that her Monday comments had been "misunderstood": "In that I used the phrase 'very rare,' and I think that's a misunderstanding to state that asymptomatic transmission globally is very rare: what I was referring to is a subset of studies."
WHO then went on to urge governments in Pakistan to resume lockdowns due to a resurgence in infection rates.
This prompted Dr. Nicole Saphier, a director at Memorial Sloan Kettering Monmouth, to remark, "It feels like we've been misled by them from Day One," and she added that WHO is "trying to differentiate between asymptomatic individuals and pre-symptomatic individuals [the latter of whom can easily infect others]....... the data coming out across the world is showing it is rare for the asymptomatics to transmit the virus."
Saphier concluded that the main focus moving forward should be protecting the elderly with chronic medical conditions, and that if hospital beds should start to fill up due to new infection rates caused by lockdown easements, the strategy should be "not to stay at home and do lockdown orders but, yes, encourage again hand hygiene and social distancing."