Meanwhile, Russia keeps its April output flat: File Image/PixaBay
Oil prices rose again on Friday, albeit minimally, but given its historic slide into negative territory on Monday there was no escaping a third straight week of losses; that said, Friday’s gains were due to Baker Hughes reporting that producers in April cut the number of active U.S. oil rigs by the most in a month since 2015; plus in Canada, drillers slashed the number of oil and natural gas rigs to a record low.
Experts say such mandates are necessary to mitigate too much surplus at a time when the panic over the coronavirus coupled with draconian government restrictions imposed upon three quarters of the world’s population has caused demand destruction.
Brent rose 11 cents to settle at $21.44 per barrel, while West Texas Intermediate rose 44 cents to close at $16.94.
At least it’s not another Friday sell-off
Bloomberg noted of oil and trading in general, “At least it’s not another Friday sell-off, which has been a feature of this pandemic as investors trim exposure before two days of headlines about rising death tolls.”
Liz Ann Sonders, chief investment strategist at Charles Schwab, struck a cautiously optimistic stance on Friday after the S&P 500 gained 1.4 percent by saying, “The stability and resilience of the market in the face of what is still horrific economic data is probably a function of an assumption or hope that the compression in earnings and the economy, although deep, won’t be long lasting.”
Meanwhile, the usually slow to act Russia moved in advance of the recently agreed upon crude cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies by keeping April output flat, it was reported on Friday.
While drastically reducing output is one way to keep the oil industry on life support, the solution to rejuvenating it is a resumption of world economies, and on that score John Kennedy, senator for Louisiana senator, illustrated the growing divide in mindset between normal citizens desperate to get back to work and other parties by remarking, “The uber elites and some members of the media, some…politicians, academics, say you’re morally tainted if you want to talk about the economy; I think that point of view is untethered to reality.”
With regard to the argument that businesses should stay closed until new coronavirus infections are at a minimum or a vaccine has been developed to deal with the disease, he said, “By then the economy will have collapsed; I wish we could do that, but we will have burned down the village to save it.”
U.S. senate majority leader Mitch McConnell said reopening businesses is also necessary considering that the massive government spending bills passed to prevent total economic collapse will merely add to an unsustainable national debt.
It should be noted that to date, Influenza A and B have killed more people globally in 2020 than the coronavirus – and vaccines have long been developed for those two strains of the flu; also, it remains unclear why in many parts of the western world businesses can’t function to some degree of profitable capacity while still practising social distancing and other safety mandates.
Rounding out Friday’s news was Tim Cook, CEO of Apple, who reportedly told U.S. president Donald Trump that the economy will have a v-shaped recovery, where a big downturn is matched by an equally big upswing, following the outbreak.