COVID-19 Market Update
Brent crude gained over 1% Thursday, which--dull as it sounds--was its highest level since March. The bump came as US inventories lessen and OPEC cuts production, while governments are starting to ease COVID-19 restrictions and reopen parts of the economy helping to put demand on the recovery path. WTI gained 1.28% Thursday. But on Friday, a new panic set in after China declined to publish its annual economic growth targets, sending oil prices 6% down in the early Friday hours. (Check out the Oilprice.com homepage for live oil prices).
US inventories dropped for two straight weeks, with EIA data showing that inventory rose by 6.6 million bpd in Q1 and will rise by 11.5 million bpd in Q2, but then we will see refiners buy up stored oil as the economy reopens.
The aftermath of the oil price war and a global pandemic will revert the oil industry back to the 1990s, with consolidation, capital efficiency, and higher barriers to entry, according to the new Goldman Sachs annual report. And the driving force of it all will be demand from investors for higher profits plus lower carbon intensity. This fortifies Oilprice.com’s continued insistence that we have entered a new megatrend of ESG investing that is driven by market forces rather than politics.
Giant YPF, Argentina’s state-controlled energy company, has announced it will shelve LNG export expansion plans due to low demand. YPF was originally planning to potentially install…