COVID-19

As cases of COVID-19 climb, oil prices face a longer recovery

Scott Tong Oct 19, 2020
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An Austrian soldier stands guard outside the OPEC headquarters in Vienna in 2016. Joe Klamar/AFP/Getty Images
COVID-19

As cases of COVID-19 climb, oil prices face a longer recovery

Scott Tong Oct 19, 2020
Heard on:
An Austrian soldier stands guard outside the OPEC headquarters in Vienna in 2016. Joe Klamar/AFP/Getty Images
HTML EMBED:
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A key OPEC committee met Monday to assess production levels amid concerns of weakening economies and oil demand in the world.

The world economy had been recovering in recent months, but now COVID-19 cases are rising in places that happen to use a lot of oil, including India, Brazil and the United States.

“Cases are surging, and a lot of governments are imposing lockdown measures again, reimposing those,” said Herman Wang, who covers OPEC for S&P Global Platts. “So that’s going to have an impact on energy demand.”

That’s keeping prices down. The average pump price in the United States today is $2.15 a gallon and falling.

Still, the next round of COVID might not crush gasoline use the way it did in the spring.

“People feel safe in their cars,” said Jacques Rousseau, managing director at ClearView Energy Partners. “And they have that level under control in terms of the circle of people, you know, much more confident in driving in their cars versus getting on a plane or a train.”

Jet fuel demand may stay weak

The bigger fear for oil producers is people don’t want to fly, as jet fuel demand remains weak. The group known as OPEC Plus — a bloc of exporters, including Russia — is scheduled to loosen supply in January. Now, it’s not so sure.

The Saudi energy minister Prince Abdul Aziz Bin Salman has said the group will do what it can to keep supply in line with demand, which would bolster prices.

And consultant Sara Vakhshouri at SVB Energy International said the minister’s audience is not just market analysts and traders; it’s algorithms, big-data programs that incorporate key words in the public conversation to generate price forecasts

“So Prince Abdul Aziz is talking not only to me and you and traders in the market, he is also talking to a computer, to the artificial intelligence,” Vakhshouri said. “And this is something fascinating.”

He wants them all to get the message that crude prices will be going up, Vakhshouri said.

OPEC’s next full meeting is in six weeks.

COVID-19 Economy FAQs

What do vaccines mean for economic recovery?

COVID-19 is not going anywhere anytime soon, according to expert witnesses who testified at a recent hearing held by the Joint Economic Committee. Put simply, we can’t eradicate the virus because it infects other species, and there will also be folks who choose not to get the vaccine or don’t mount an immune response, according to Dr. Céline Gounder at NYU School of Medicine & Bellevue Hospital. “That means we can’t only rely on vaccination,” Gounder said. She said the four phases of recovering from the pandemic are ending the emergency, relaxing mitigation measures, getting to herd immunity and having long-term control.

Can businesses deny you entry if you don’t have a vaccine passport?

As more Americans get vaccinated against COVID-19 and the economy begins reopening, some businesses are requiring proof of vaccination to enter their premises. The concept of a vaccine passport has raised ethical questions about data privacy and potential discrimination against the unvaccinated. However, legal experts say businesses have the right to deny entrance to those who can’t show proof.

What do I need to know about tax season this year?

Glad you asked! We have a whole separate FAQ section on that. Some quick hits: The deadline has been extended from April 15 to May 17 for individuals. Also, millions of people received unemployment benefits in 2020 — up to $10,200 of which will now be tax-free for those with an adjusted gross income of less than $150,000. And, for those who filed before the American Rescue Plan passed, simply put, you do not need to file an amended return at the moment. Find answers to the rest of your questions here.

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