But Sen anticipates a Covid vaccine will revive the moribund air travel sector: File Image/PixaBay
Suggesting once more there is little rhyme or reason in crude trading patterns, oil on Wednesday jumped over 3 percent, almost recouping the losses from the previous session's settle at a three-month low.
The increase coincided with a rally in broader equities markets, which compelled Gary Cunningham, director of market research at Tradition Energy, to remark that "the economy isn't in as bad a shape as thought."
Despite traders of late acting on the notion that demand has stalled due to rising Covid infections in some parts of the world, a poll on Wednesday showed that U.S. crude stockpiles were expected to fall for a seventh straight week, ditto refined product inventories - clear signs that demand is in fact recovering.
Gary Cunningham, Tradition Energy
The economy isn't in as bad a shape as thought
Additionally, China on Wednesday reported an easing of inflation in August, which signals a recovering economy; also, Japan reported that its economy expanded more rapidly than originally estimated between April and June; this in turn caused jumps in the Dow Jones average, the Standard & Poors index, and the S&P 500.
Following suit, Brent on Wednesday rose $1.21, or 3 percent, to $40.99 per barrel, while West Texas Intermediate settled $1.29, or 3.5 percent, higher at $38.05 per barrel.
Still, it's almost become fashionable to favour the downside in crude analysis: Morgan Stanley said, "Short-term oil market fundamentals look soft: the demand recovery is fragile, inventories and spare capacity are high, and refining margins are low."
Amrita Sen, chief oil analyst at Energy Aspects, was one of the few experts to express a balanced outlook: "Demand is recovering for sure," she told Bloomberg. "But in transportation there's a weakness...yes, traffic data is picking up, but flying, jet fuel demand remains at record lows still.
"Until there's a [Covid] vaccine, it is going to be hard to get people moving in the same way."
On that score, Wednesday saw continued vaccine developments, including: the European Commission announcing it had entered final stage talks with BioNTech-Pfizer to purchase up to 300 million doses of vaccine, with deliveries starting at the end of this year; a host of medical experts, including National Institute of Allergy and Infectious Diseases Dr. Anthony Fauci, agreeing that delivery of a vaccine this year is still possible despite AstraZeneca pausing its trial; and Russia's sovereign wealth fund announcing it will deliver 32 million doses of its Sputnik-V vaccine to Mexico's Landsteiner Scientific starting in November.