Market Pulls Back as Travel Restrictions Re-emerge
July 10th, 2020
The market pulled back yesterday as it appears the concerns about rising cases of COVID-19 could pull back rising gasoline demand if lock downs and travel restriction reemerge.
India reported that fuel demand fell by 7.9% in June compared with June 2019, which hurt the market sentiment as demand in India has been coming back nicely.
The downside for energy was also helped by news that Libya is trying to lift the force majeure and export oil out of its largest terminal Es Sider. Libya is a very fluid situation and the promise of more exports is likely limited, but the market is picking up and headlines.
The IEA increased its 2020 oil demand forecast but warned that the spread of the virus was a risk to their outlook. The IEA sees demand to average 92.1 million bpd up 400,000 bp from their last forecast. “While the oil market has undoubtedly made progress… the large, and in some courtiers, accelerating number of COVID-19 cases is a disturbing reminder that the pandemic is not under control and the risk to our market outlook is almost certainly to the downside,” the IEA said in its monthly report.
The news on the virus and increasing cases seems to be front and center for the markets. The increasing cases looks like it will cause California, Florida, and Texas to reimpose some restrictions. The market’s concern is that if this trend continues to it will again impact demand.
While fewer American applied for unemployment benefits last week, more than 18 million were still claiming those benefits at the e3nd of June. Initial jobless claims fell by the most in a month, but they’re still double the highest level during the Great Recession.