The International Energy Agency is optimistic about a continued recovery into 2021: File Image/PixaBay
Tuesday's crude trading was a repeat of the previous session in that the commodity's prices rose significantly on the strength of on-going demand recovery but capped by concerns of rising coronavirus rates in different regions of the world.
However, a major breakthrough for seriously ill COVID-19 patients announced on Tuesday may not just be a game changer in the fight against the pandemic but also the first of several breakthroughs supporting nascent consumer confidence and contributing to a complete economic recovery.
Crude was bolstered by all three major U.S. stock indexes posting their third consecutive daily gains due to retail sales jumping by a record 17.7 percent in May, compared to expectations of an 8 percent increase - an indication the economic recovery could be V-shaped as originally hoped for rather than the Nike 'swoosh' economists subsequently thought would happen.
International Energy Agency
If recent trends in production are maintained....the market will be on a more stable footing by the end of the second half
However, gains were curbed slightly by the American Petroleum Institute reporting that U.S. crude inventories rose by 3.9 million barrels last week, compared with expectations for 152,000 barrel draw.
Traders' enthusiasm was also tempered by news that coronavirus cases rose to more than 8 million worldwide this week, with infections rising in Latin America, and outbreaks occurring in parts of the U.S. and China (even though the rises were expected and will likely contribute to another lowering by the Centers for Disease Control of the virus's fatality rate).
As a result, Brent ended the session up $1.24 at $40.96 per barrel while West Texas Intermediate rose $1.26 to settle at $38.38 per barrel.
The International Energy Agency on Tuesday noted that while the government imposed worldwide lockdowns to slow the spread of the virus would result in crude demand falling by 8.1 million barrels per day (bpd) in 2020, it would grow by 5.7 million bpd in 2021.
The group added, "So far, initiatives in the form of the OPEC+ agreement and the meeting of G20 energy ministers have made a major contribution to restoring stability to the market.
"If recent trends in production are maintained and demand does recover, the market will be on a more stable footing by the end of the second half."
The fear from a business perspective is that health officials may persuade governments to again impose lockdowns if the new COVID-19 infections continue to rise; however, it is becoming clear that the lockdowns did more harm than good and arguably did nothing to curb infections, one of many examples being India, whose rates have risen dramatically despite that country being in strict lockdown since March (by contrast, mask-wearing has been credited for lowering infections rates in another densely-populated region of the world, New York City).
However, the fear of the virus that is restricting full-out return to normality may end sooner than later: dexamethasone, a cheap and common steroid used to reduce inflammation in other diseases such as arthritis, has become the first drug shown to be able to save the lives of seriously ill COVID-19 patients, it was reported on Tuesday.
Scientists say the drug should immediately become standard care in U.S. patients with severe cases of the pandemic disease; it has already been approved for use in the U.K.'s state-run health service: "If patients who have COVID-19 and are on ventilators or are on oxygen are given dexamethasone, it will save lives, and it will do so at a remarkably low cost," said Martin Landray, an Oxford University professor co-leading the drug's trial.
Another COVID-19 breakthrough was achieved on Thursday with the announcement that the U.S. Department of Health and Human Services has narrowed its focus to seven vaccine candidates from the 14 it has been working with so far - and plans to give the approved vaccine to people with limited incomes at no charge once it begins distribution in January.
Also, Singapore scientists announced on Tuesday they will start human trials of a vaccine from Arcturus Therapeutics after promising initial responses.