Meanwhile, China crude imports climb significantly: File Image/PixaBay
Even though the oil market on Thursday experienced a 2 percent drop after an earlier gain of over 11 percent, the analytical community was united in its stance that the worst of the commodity downturn is over, as more and more governments are forced to relax the draconian lockdowns they thought were necessary to slow the spread of the coronavirus pandemic.
John Kilduff, founding partner at Again Capital, countered that “Volatility will remain the watchword, but there is an increasing sense that the worst is behind the industry, at this point.”
He added, “There has just been a fierce reaction by U.S. oil and exploration and production companies to really crater U.S. output; it’s still very high, but it’s working its way down rapidly.”
Daniel Yergin, vice chairman, IHS Markit
You can feel certainly a change in sentiment
Concern over the remaining physical overhang in crude stocks was said to have caused West Texas Intermediate to shed 44 cents, or 1.83 percent, to settle at $23.55 per barrel, while Brent settled 26 cents lower at $29.46 per barrel.
But Kilduff maintained his positive near-term outlook for the commodity, noting that “There still may be one more flirtation with negative pricing when this June contract goes off the board in a couple of weeks, but beyond that we should be clear of those kind of worries.”
Daniel Yergin, vice chairman at IHS Markit, agreed: ″You can feel certainly a change in sentiment,” and he added that the Organization of the Petroleum Exporting Countries (OPEC) cutbacks and shut-ins of U.S. wells is making a difference: “All of that has changed the equation for thinking about oil prices; what’s happening with the shut-ins, they do become significant numbers and give some relief to the market.”
Francisco Blanch, head of commodities and derivatives strategy at Bank of America, remarked, The reason we are excited is we are past the worst point: if you think about the moment in the crisis where demand was at the lowest point and supplies were at the highest point, we’re past that.”
Meanwhile in China, where government downplaying of the coronavirus is said to have caused the pandemic, imports climbed to 10.42 million barrels day (bpd) in April from 9.68 million bpd in March; also China’s overall exports data showed a rise, confounding expectations for a sharp drop.
Health experts who two months ago contributed to the coronavirus panic with fatality warnings that proved to be way off the mark continued to warn that relaxing of stay at home orders will cause more deaths; however, more than half of the U.S. states have reopened their economies to some degree, causing gasoline demand to rise in the past week to 6.7 million bpd from 5.9 million the week earlier.
Also, Oil Price Information Service data shows that drivers have increased their purchases at the pump (still buying 37.7 percent less than normal but improved from 50 percent).
As for the lockdown easements spurred by widespread protests throughout the U.S., the legal community continues to go after government figures who have accused of wielding undue power over the people: state lawmakers in Michigan have filed a lawsuit against one of the most notorious of these individuals, Michigan governor Gretchen Whitmer, demanding she reopen her state after she extended her state of emergency declaration.
The lawsuit stated in part, "No single person, despite their intentions, should be given unilateral power over our state indefinitely."
While ordinary citizens slowly clawed back their freedom, media continued to uphold the state - and on Thursday Dana Brown, director of The Next System Project at The Democracy Collaborative, lamented that private corporations are at the forefront of developing vaccines against the virus.
She told CNBC that We should nationalize what remains of the American vaccine industry now, thereby assuring that any coronavirus vaccines produced can be made as widely available and as inexpensive soon as possible."