Covid's impact on oil prices - August 24

[dan_s]

Here is a hard and fast rule: Whenever the price of a commodity pulls back because of FEAR, it only takes less FEAR for the price to rebound.

Oil Rallies As China’s Success Against Virus Eases Demand Fears
Bloomberg: 2021-08-24 15:13:32.17 GMT
By Alex Longley and Sheela Tobben
Oil prices in New York gained for a second
session, building on the biggest one-day gain in nine months,
amid glimmers of optimism among bulls that the delta coronavirus
variant’s hit to demand may be passing.
U.S. oil futures rose as much as 2.9% while Brent futures
topped $70 a barrel. China has rapidly brought local virus cases
down to zero and traffic is showing signs of recovery, although
the variant continues to impact other regions.
In yet another positive sign for demand, the country re-
opened its Ningbo port, one of the busiest in the world, after a
two week shutdown. Separately, a fire on a Mexican oil platform
wiped out more than 400,000 barrels a day of the nation’s
output, curbing supply.
“The developments out of China are reigniting expectations
that oil demand would start to rise again,” said Phil Flynn,
senior market analyst at Price Futures Group Inc. Meanwhile,
Mexico’s platform outage is curtailing supply just as the market
speculates OPEC+ may not proceed with previous plans to restore
output when it meets next month, he said.

Rise in Permian
Covid’s resurgence has interrupted oil’s rally and has
prompted speculation that OPEC+ may reassess its current plan to
return additional barrels to the market. The group next meets
Sept. 1. Goldman Sachs Group Inc., however, reiterated that the
demand impact from delta would be transient, while UBS Group AG
sees Brent crude recovering to $75 a barrel on market tightness.
Monday’s rally also saw a sharp strengthening timespreads
that indicate market strength. The difference between the
nearest two December Brent futures contracts jumped by the most
since April. Gains in the global benchmark widened its spread to
WTI to the widest premium since May.

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Prices
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West Texas Intermediate for October delivery rose $1.74 to
$67.38 a barrel by 11:03 a.m. in New York.Brent for October
settlement gained $1.83 to $70.58

Later this week, investors will also be considering the
Jackson Hole symposium -- being held virtually from Thursday --
which may offer insights into how the Federal Reserve plans to
scale back stimulus.
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BofA Equity Research also sent out a note to clients this morning that their analysis shows that the new cases of the Delta Variant in the U.S. may have peaked and that deaths remain well below fatalities seen in the U.S. earlier this year. Deaths from Covid in Texas were 29 during the 7 days ending 8/23/2021, which compares to Covid deaths of more than 325/week in January.

[Fraser921]

>Separately, a fire on a Mexican oil platform
wiped out more than 400,000 barrels a day of the nation’s
output, curbing supply

That's 25 m a day. Maybe Pemex will wake up and work with Talos