Oil Up On Signs of Improved Economic Recovery, Russian Commitment

But Covid infection rate rises still concern traders and analysts: File Image/PixaBay

One day after oil prices dipped due to worries over demand recovery, signs on Thursday of a marginal improvement in the U.S. economy and rise in road traffic caused traders to boost the commodity by about 2 percent.

Brent rose 74 cents, or 1.8 percent, to settle at $41.05 per barrel, while West Texas Intermediate   settled up 71 cents, or 1.9 percent, at $38.72, after technology company TomTom revealed that motoring in some of the world's major cities in June had returned to 2019 levels.

Traders also took heart in data showing that fewer Americans filed for unemployment benefits last week and orders for key capital goods rebounded in May.

On the global front, news that Russia slashed exports of its crude Urals to the lowest in a decade indicated the former Soviet Union's determination to work with the Organization of Petroleum Exporting Countries (OPEC) to eliminate the prevailing oil glut.

But as always, Covid was dominant in the minds of analytical and business leaders, especially with the mainstream press now fully indulging its obsession with reporting rising infection numbers in different parts of the world.

Also, reports continued to reveal the depth of the devastation caused by world governments ordering billions of people to stay at home in an attempt to slow the spread of the virus: data on Thursday showed the value of Saudi Arabia's oil exports dropping by 65.4 percent in April when compared to the same month a year earlier, or a fall of about $12 billion.

The International Monetary Fund said the Saudis' economy could shrink by 6.8 percent this year.

Gene McGillian, vice president of market research at Tradition Energy, said, "Part of the rebound here is the idea that all the stimulus measures that central banks and the world's governments are pumping into the economy is going to have a positive impact on economic activity and that it will be supportive to demand.

"The only roadblock is if the number of COVID-19 cases picks up and we have to reimpose shelter in place measures; but I don't think we can conclude that it's in the cards yet."

Certainly from a consumer point of view, the determination to get on with life seems to take precedence over fears of the virus itself: Michael Tran, managing director of energy strategy at RBC Capital Markets, remarked, "Vehicle traffic continues to improve, international flights re-gain ground, employees phase back to work, and discretionary activity picks up."

Unfortunately, even the hardiest of consumers along with traders are swayed by news headlines, and the sheer number of headlines devoted exclusively to chronicling the resurgence of the virus continues to generate misconceptions about the virus itself.

Numbers from the real-time Worldometer website tell a different story: it shows that of the 3,947,838 active cases of the virus worldwide, 3,890,332 of them - or 99 percent - are considered mild, and only 57,506 (1 percent) are serious or critical.

Also, while the total number of coronavirus cases has climbed to 9.6 million, the resulting deaths slowed once they reached the 400,000 mark and have yet to breach 500,000 (the number as of June 25 is 488,928) - meaning the fatality rate of the virus continues to decline.

As for that 1 percent of newly infected people in serious or critical condition, hospitals are increasingly using as treatment the steroid drug dexamethasone, which has been proven to dramatically lower death rates; also, remdesivir has become the first therapy for the disease endorsed by regulators in Europe.

Finally, in response to the notion pushed by many media outlets that Covid may mutate into something more severe, Dr. Ashish Jha, general internist and director of the Harvard Global Health Institute, said, "I'm not worried that there's going to be a meaningful mutation that will lead to the disease becoming much more severe.

"We'll obviously be paying very close attention to that and we have much better tools for looking at viral genetics, we didn't have any such tools 100 years ago, [but] of all the things I lose sleep over, this isn't one of them."