What’s going on: Mid-term futures from West Texas, the U.S. benchmark, were last traded above $ 32 a barrel, having gained over 70% this month. Futures on Brent crude oil, the global benchmark, were last traded at $ 35 a barrel, a 39% monthly increase.
Prices are still extremely depressed – Brent crude oil futures were trading near $ 69 a barrel earlier this year. But it is clear that the process of rebalancing supply and demand is underway.
“We are now in a phase of greater stability in the market,” Paola Rodriguez-Masiu, senior analyst of the oil markets of Rystad Energy, told clients. “Market volatility with huge daily swings would be unexpected and unwarranted.”
However, some on Wall Street are concerned that the return was too rapid and could cause further damage along the line.
UBS analyst Giovanni Staunovo said in a research note Wednesday that he believes inventories at the U.S. storage hub in Cushing, Oklahoma, likely peaked in early May. Meanwhile, the record cuts launched by OPEC and its allies earlier this month, along with voluntary cuts from other manufacturers, have helped reduce oversupply as some movement restrictions have been lifted.
This supports higher prices. But Staunovo fears that the demonstration may “prove self-defeating”, since it is likely to encourage some producers to increase production again.
The trajectory of oil demand also remains extremely uncertain, even if the blockages are loose.
“While the demand for gasoline has brought about a strong recovery as people return to work, there are still many unknowns as to how far the demand for oil will eventually recover,” wrote Staunovo.
Politicians around the world have expressed their concerns these days about the nature of the possible economic recovery.
British finance minister Rishi Sunak said on Tuesday that it is not obvious that there will be an “immediate rebound” for the UK economy after the coronavirus pandemic recedes.
“It will take time for people to return to their habits,” he added.
Asia’s richest man is looking to build the next global tech giant
Mukesh Ambani wants to build the next global technology company. And if he plays his cards well, his mobile operator and the tech giant JioPlatforms could soon position themselves alongside Google, Amazon, Alibaba and Tencent, reports my CNN Business colleague Sherisse Pham.
JioPlatforms already has an app ecosystem – which includes everything from online shopping to video streaming – that serves 388 million people subscribing through the Reliance Jio mobile network in India.
Ambani “definitely [wants JioPlatforms] be more than just a telecommunication company. They want to be India’s next Google or Tencent, “PitchBook analyst Wylie Wylie Fernyhough told Sherisse.
The “ultimate goal”, according to Counterpoint Research analyst Tarun Pathak: to become everything for all Indians and build an indispensable platform for the country’s hundreds of millions of Internet customers.
Look at this space: Facebook’s partnership is still awaiting regulatory approval and Facebook has rejected the idea that it is helping Ambani to build a “super app”, noting that the two companies will continue to operate separately in India. But the collaboration gives both sides a new weight in the large Indian market.
Takeaway from reality check on Moderna vaccines
Market reaction: Moderna’s shares fell by more than 10% and the S&P 500 lost 1.1% as investors sought to block recent gains.
The volatility reflects the extent to which Wall Street places its hopes in vaccine or coronavirus treatment as countries begin to reopen their economies. It is also a reminder that the shares of the drug producers involved could continue to see big moves in both directions.
Come on next
- The latest U.S. crude oil inventory data arrives at 10:30 ET.
- Minutes from the Federal Reserve’s April meeting place at 2:00 PM ET.
Tomorrow: initial jobless claims in the United States for the past week. Another 2.4 million Americans are expected to have filed the first week of unemployment benefits.
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