Oil commentary - 19 April 2021
Morning all and I hope everyone had a good weekend. Brent is trading this Monday morning at $66.40 down 0.37 and WTi is trading down 0.32 at $62.81. To say I'm a bit confused is an understatement. I feel like I've been given one of those 1000-piece Baked bean puzzles and I cannot find a corner anywhere. Yet I lok at equity and oil markets and it's like they've all been given a six-piece wooden duck puzzle. Easy. Before we get into the state of the current oil market, I want to take you back to 20th April 2020, a year ago tomorrow. Everyone was locked down. Zoom cheese and quiz nights were all the rage and you couldn't get your hands on a pack of flour to make your banana bread. In Cushing however, the delivery point for WTi, the oil price traded down to a low of negative $40.32. Yep. -$40.32. You actually couldn't give crude oil away. Where are we now? Yep, $103.32 per barrel higher than that most unfortunate of US oil trading days. As much as the world fell off its chair and every US driller red buttoned their bankers phone calls, if I would have said to even the most optimistic person in the world "Yeah don't worry, it will rally by $100 per barrel in less than a year", he would have called the authorities. Hello? Yes, there's a mad person in front of me talking rubbish, have him removed. OK, let's jump forward to the present day, and this most unfortunate headline, "More people were diagnosed with COVID-19 during the past seven days than any other week since the start of the pandemic". Cases in India today are 271,000. Cases in Brazil are out of control. Argentina is facing protests versus government lockdowns and Hong Kong have suspended flights from India, Pakistan and the Philippines. Let's balance this argument though, the UK enjoyed the first free weekend for a while and a travel bubble has opened between Australia and New Zealand. What all this tells me is that the path to recovery is bumpy and uneven. And none of that is good for oil demand. Who cares though? Not the oil market. I'm off to find some baked beans. A corner! Oh wait, another bean. Good day and week to all.