Surging Demand, Economic Rebound Sends Crude Prices Up Yet Again

Meanwhile, IEA predicts crude demand won't peak until 2030: File Image/PixaBay

The welcome and increasingly familiar dual elements of crude production cutbacks and demand recovery caused oil prices on Tuesday to climb yet again, corresponding with a rise in global equities as the government-imposed Covid-19 lockdowns continued to ease.

Brent  gained 64 cents to settle at $36.17 per barrel, and West Texas Intermediate rose $1.10 to settle at $34.35 per barrel.

Prices were also buoyed by Russia disclosing that its oil output had dropped close to its target of 8.5 million barrels per day for May and June under the supply deal reached by the Organization of the Petroleum Exporting Countries (OPEC).

Additionally, Alexander Novak, energy minister for the former Soviet Union, met with domestic major oil companies on Tuesday to discuss the possible extension of the current level of cuts beyond June, which prompted Phil Flynn, senior market analyst at Price Futures Group Inc., to remark, "All the talk about balance in a couple of months seems to be supportive."

In related news, Fatih Birol, executive director of the International Energy Agency, quashed the hopes of environmentalists that the coronavirus would cap fossil fuel demand by stating that global oil demand won't peak until at least 2030.

Tuesday's good news was hardly confined to the energy market: as if to reinforce the notion that an economic recovery will be steady and all-encompassing, Europe on Tuesday enjoyed a 6.9 percent surge in travel and leisure stocks, while on Wall Street shares of American Airlines and United Airlines Holdings rose more than 15 percent (U.S.-listed cruise ship operators jumped about the same).

Better still, Spain on Tuesday announced that quarantine-free tourism would resume next month.

Jason Benowitz, senior portfolio manager at the Roosevelt Investment Group Inc., said, "Reports of economic activity, while still terrible compared to three months ago, have begun to get less bad as compared to the prior month."

Meanwhile, as virus infection and deaths rates continue to abate globally, emerging evidence reinforced the original view of medical professionals (and subsequently downplayed by media and policy makers) that the overwhelming number of Covid-19 fatalities were not just among the elderly but the elderly with underlying medical conditions.

According to data from Italy's ISS health institute, nearly 96 percent of coronavirus related fatalities in that country were seniors with preexisting conditions; just 1.1 percent of virus fatalities were among people under 50 and more than 57 percent of the fatalities took its toll on people aged over 80.

Also, despite the World Health Organization insisting there is "no evidence" that people who recover from coronavirus are protected from a second infection, nearly all of the nurses and doctors at a hospital in northeastern France who were infected with the virus were shown to develop antibodies against it, according to new research conducted by the Institut Pasteur.