Oil to suffer long term

1 June, 2020

The oil price is down more than 1 percent in today’s trading session as the market digested the news on bigger than expected oil inventories in the US which raised concerns that demand was starting to slide.

The U.S. Energy Information Administration (EIA) released figures showing that crude oil inventories rose 7.9 million barrels over the last week, well above analyst’s expectations which was attributed to a big increase in imports. Some say the extra inventories are justified because gasoline demand is picking up as the US population begins driving again and lockdown measures regarding the coronavirus are eased. 

“Even though we got the big increase in crude supplies, there’s optimism in the numbers because of the uptick in refinery runs and because of the uptick in gasoline demand,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.

The coronavirus epidemic has caused long lasting misery and financial pain to all sectors of the economy and one of the worst casualties was the oil price which just over a month ago fell into negative territory before staging a sizeable comeback and is currently trading at over $30 per barrel.

However, the long-term damage may already be done as the world’s population rearrange their daily working lives which is going to have a huge impact on the oil price going forward.

One of the biggest threats to oil demand is the current trend of working remotely which was forced on most of the world’s population due to the coronavirus. This may become the new norm for many as businesses seek to cut costs by saving on rent for office space which means less travelling by car or by plane which will have a huge impact on oil.

“Pretty much every company out there with a sizable commercial real estate footprint is thinking about this now,” said Dan Klein, head of scenario planning at S&P Global Platts. “While it’s probably too early to tell how prevalent this structural shift in working from home will become after the restrictions are lifted, it’s clear that a certain percentage of workers will never go back to commuting, at least every day,” he added.


Source  
The market does not respond to statistics26 Mar, 2021  

The financial markets have changed a lot in the last few months. This may be too loud of a statement, but we are indeed witnessing a global change in a number of economic...

Oil, gold and interest rates12 Mar, 2021  

Earlier, we have repeatedly noted the high contribution of OPEC+ to the recovery of the oil market, which led to a fairly strong increase in oil prices. At the same time...

EUR renews growth26 Feb, 2021  

In the first three trading days of this week, we observed a weakening of the US dollar against most currencies. In particular, the British pound sterling against...


Decreased interest in risk24 Feb, 2021  

I will start today's review with the fact that the current week began with moderate sales on the stock markets of the United States and Europe. I would also like to draw...

Why did euro fall on the Fed publication?29 Jan, 2021  

Biden's new stimulus plan faces resistance from a bipartisan group. Republicans believe the overall cost of Biden's stimulus package could be reduced during...

USD correctional growth12 Jan, 2021  

The current week started with another wave of growth of the US dollar, which is largely due to the weakening of European and commodity currencies. As a result...


USD may continue to decline in 202119 Nov, 2020  

Let me remind you that earlier I already noted the statements of analysts from Morgan Stanley, who recommended getting rid of USD and paying attention...

Fed expects stock market crash12 Nov, 2020  

It's no secret that the world economy is in a stalemate. For several months, most of the world's countries have been on the verge of a financial crisis, which can only...

The collapse in oil prices27 Oct, 2020  

There is less and less optimism and this is very clearly seen in the change in risk appetite. France records more than 52,000 officially confirmed COVID-19 cases every day...