Spot Cargo Markets-Second Wave

摘要

Oil markets on either side of the Atlantic were uneventful in the past week. Both Brent and West Texas Intermediate (WTI) have struggled to gain further ground as investors ponder lackluster demand and the possibility of a second wave of coronavirus. The subdued volatility has also staved off the market’s appetite for oil exposure. Brent tentatively broke above the $44 per barrel mark on Jul. 21, partly buoyed by jubilant equity markets after the EU brokered an $860 billion recovery package. But the benchmark eventu-ally gave up gains, settling 6￠ lower on the week, at $43.31. WTI fared a little better, closing 32￠ higher at $41.07/bbl. The massive monetary stimulus may help nudge demand higher. So far, the market’s resilience has hinged on two key hopes: that the Covid-19 pandemic would eventually abate, and that China would keep buying crude oil at the same pace as in April and May. Yet, those expectations seem increas-ingly fragile. In the US and in other regions, Covid-19 cases have continued to rise, and a return to stricter lockdowns would derail the fledgling recovery. China’s economy had shown early signs of improvement, but the country is now facing massive rain floods that are crippling its transporta-tion and industrial activity, putting a damper on domestic demand. In a sign that the market has somewhat cooled off, Brent volatility has fallen from 50% at the beginning of July to about 30%. Money managers added 10 million barrels in speculative interest last week, but with bulls on the side-lines, Brent trading has remained relatively quiet. Likewise, net speculative length in Nymex WTI futures has remained mostly unchanged over the week. Oil demand has bounced back from its April low as governments have moved to reopen their economies. Yet bulging product stocks continue to grow and weigh heavily on refined product markets.