Oil futures markets recovered yesterday after the markets learned that the US oil stockpiles fell more than expected and despite the fears for the second wave of Covid-19. On the other hand, the US stocks market advanced on Wednesday's session.
According to data released by the Energy Information Administration, the US crude oil inventory went down by 7.2 million barrels in the week ending June 27. The data contrasts with the previous figure, which showed an increase of 1.4 million barrels in the oil inventories, kindling the fears for oversupply.
Besides this, there are concerns about the current situation triggering the bankruptcy of some businesses from the U.S. energy industry, particularly shale oil producers. Despite oil prices doubling since April, some analysts expect some companies from the US energy industry to go bankrupt, as some of them were struggling before the Covid-19 outbreak.
As per expectations for the oil markets, analysts at Citigroup told Bloomberg that oil demand probably will never return to pre-coronavirus rates of growth and that oil prices will be at 45$ per barrel in the long run, so relying on the idea that oil prices will come back to the $100 level may not be wise.
Yesterday, the markets also learned about a potential coronavirus vaccine that is being developed by Pfizer and BioNTech, as it caused immune responses in healthy patients.
Despite the good news, a surge in Covid-19 cases is being reported in the US, as states like California, Florida, and Arizona are reporting peaks on the number of infections. This has pushed certain states, like New York, to strengthen restrictions concerning visitors coming from other states. At the moment, there are around 10,812,069 confirmed Covid-19 cases around the world as well as a death toll of 519,110. The United States continues leading the world in terms of the number of infections, with 2,779,953 confirmed affected individuals as well as a death toll of 130,798.
The St. Louis Federal Reserve Bank President, James Bullard told the Financial Times that the elevated number of bankruptcies due to the advance of the Covid-19 outbreak could drag the world into a financial crisis.
"Without more granular risk management on the part of the health policy, we could get a wave of substantial bankruptcies and (that) could feed into a financial crisis,” he said, adding that the US economy could eventually "take a turn for the worse".
Moreover, June's ADP employment report turned out to be disappointing, since US companies added around 2.37 million jobs which were behind the analysts' expectations.
“You can’t glean from that that something positive is happening in the labor market,” commented an analyst at Moody’s Analytics, adding that it seems that an economic recovery began last month.
The West Texas Intermediate crude oil futures advanced 1.40 percent, closing on the 39.82 level on Wednesday's session. Conversely, Brent oil futures gained 2.14 percent, closing the session at the 42.03 level.
The US stock markets also advanced during the session, as the S&P 500 gained 0.50 percent, closing at the 3,115.86 level, while the Nasdaq 100 advanced 0.95 percent, closing the session at the 10,154.63 level. On the other hand, the Dow Jones Industrial Average closed on the negative territory, dropping 0.30 percent and closing in the 25,734.97 level.