The S&P 500 ended higher but closed just shy of a record on Monday as investors bet that a full economic reopening was finally in sight following the first positive data from a late-stage Covid-19 vaccine trial.
Throughout the summer, oil’s recovery from its devastating crash has looked somewhat dubious. While the price of crude rebounded somewhat, it did not wholly regain its pre-pandemic strength. And while the nations of OPEC+ put measures in place to cut production and close the gap between supply and demand, certain nations involved hinted at the reluctance to keep cuts in place. These factors, coupled with the lingering potential of fresh “waves” of the coronavirus, have kept us from being overly optimistic about the state of oil.
An article in World Oil by Laura Hurst refers to the term “stranded assets” and mentions the case of the Falkland Islands oil industry: the discovery a decade ago of as much as 1,7 billion barrels of crude offshore the British Overseas Territory, and rather than the next frontier, the project to extract energy risks being added to a list of what companies call “stranded assets” that could cost them huge sums to mothball.
Oil prices moved higher on Wednesday after an industry report showed that U.S. inventories of crude fell more than analysts had expected, bolstering hopes that fuel demand in the world's biggest economy can weather the coronavirus pandemic.
Oil prices climbed in early trade on Monday, clawing back over half of Friday's losses, on hopes for a stimulus deal to shore up the U.S. economic recovery and a pledge from Iraq to deepen its crude oil supply cuts.
Chevron said Monday it would buy Noble Energy in a US$ 5 billion all-stock deal, bolstering its shale presence as a plunge in crude prices have made assets cheaper. The deal, the largest in the U.S. energy sector this year, comes more than a year after Chevron abandoned its offer for Anadarko Petroleum, outmaneuvered by Occidental Petroleum higher bid.
Oil prices fell due to concerns about riots in major US cities that could staunch demand after trading higher on optimism that OPEC would extend or enhance production cuts at a meeting in June.
Oil prices slumped on Friday after China's decision to omit an economic growth target for 2020 renewed concerns that the fallout from the coronavirus pandemic will continue to depress fuel demand in the world's second-largest oil user.
OPEC again slashed its forecast for global oil demand this year as the coronavirus outbreak causes a global recession, although it said record supply cuts by the group and other producers were already helping rebalance the market.
Saudi Arabia said on Monday it had asked oil giant Aramco to cut an additional one million barrels per day from June, to support prices that have crashed during the coronavirus crisis.