But energy companies prove adept at weathering the worst of the lockdowns: File Image/PixaBay
Even though experts agree that the likelihood is zero, U.S. president Donald Trump on Thursday tweeting that the November presidential elections should be delayed to ensure safe voting during the Covid pandemic caused panic among traders and a corresponding loss in oil prices.
That, along with relentless news coverage of rising U.S. Covid infection rates, led to West Texas Intermediate settling down $1.35, or 3.3 per barrel, at $39.92 per barrel, and Brent falling 81 cents, or 1.9 percent, to $42.94 per barrel.
Trading sentiment wasn't helped by the disclosure that U.S. gross domestic product collapsed at a 32.9 percent annualized rate during the second quarter and the height of the government-imposed lockdowns, the deepest decline since the government started keeping records in 1947.
Gene McGillian, VP of market research, Tradition Energy
The supply demand balance could get out of whack
Gene McGillian, vice president of market research at Tradition Energy, said, "The market is now watching U.S. producers and OPEC+ [the Organization of the Petroleum Exporting Countries] consider plans to ramp up while demand isn't returning the way we thought it would a few weeks ago...the supply demand balance could get out of whack."
But slow demand is better than nothing, and to encourage activity in other parts of the world Saudi Arabia may reportedly cut its September official selling price for crude sold in Asia, according to sources on Thursday.
Meanwhile, shipping data shows Iraq's crude oil exports have increased so far in July by 50,000 barrels per day (bpd), suggesting that it is not adhering to its OPEC production target - but that the rise may be another indication of market recovery nonetheless.
Also, as if to prove that business could be maintained even during the worst of the lockdowns, the secretive oil-trading activities of Royal Dutch Shell Plc and Total SE were credited on Thursday for saving both European majors from posting losses in the second quarter.
But reports of rising infections i will continue to curb demand as well as crude prices, with the only relief anticipated to be the availability of vaccines - which continue to be a source of promising news, the latest being that Johnson & Johnson's candidate (said to have exhibited remarkable efficacy) has begun human safety trials; the front runner candidate from AstraZeneca said to be producing "good data" in large-scale human trials; and pharmaceutical companies the world over already building a huge network of supply chains to deliver the vaccines to billions of people when they become available at the end of this year or early next.