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Trump roils early October oil markets
Prices mirror presidential COVID-19 diagnosis, recovery; labor strike in Norway shuts in facilities; Boeing says aviation will soar Steve Sutherlin Petroleum News
Oil prices set out on a path of wild gyrations as the world learned that President Donald Trump and First Lady Melania Trump tested positive for COVID-19.
After a down day Oct. 1 on demand recovery concerns, the Trump announcement Oct. 2 squelched a recovery in early morning trading, sending Alaska North Slope Crude down $1.58 to $37.64, West Texas Intermediate down $1.67 to $37.05, and Brent down $1.66 to $39.27.
Trump was admitted to Walter Reed National Medical Center on the evening of Oct. 2.
On Monday Oct. 5, Trump returned to the White House and prices reacted strongly to the upside, with ANS jumping $2.20 to $39.84, WTI rising $2.17 to $39.22, and Brent up $2.02 to $41.29. All three benchmarks rose and all closed above $40 Oct. 6.
Prices were further buoyed Oct. 5 by a labor strike in Norway which shut in six offshore production facilities. The Norway strikes slashed the county’s oil output by an estimated 330,000 barrels per day, offsetting an estimated 300,000 bpd total production from Libya, where the war-torn nation is ramping up production as hostilities subside.
On Oct. 6, Gulf of Mexico oil operators began shutting in facilities and evacuating workers as Hurricane Delta, the 25th named storm of the 2020 Atlantic hurricane season, raged through the Caribbean with sustained winds of 115 miles per hour. By Oct. 7 approximately 80% of the gulf’s production was shut in.
Back at work in the Oval Office Oct. 7, in a video message, Trump said he felt “great.”
On Oct. 7, oil prices slid. ANS slipped 24 cents to $40.48, WTI sunk 72 cents to $39.95, and Brent fell 66 cents to $41.99.
Saudi Arabia, however, eased prices upward for its flagship crude oil shipped to Asia, showing strength in the physical market after a month and a half of weakness and falling refining margins, Bloomberg reported.
Saudi Aramco raised pricing for Arab Light crude for Asia by 10 cents per barrel.
Air travel needs a lift Air travel continues to be the soft spot in oil demand, but Boeing - while acknowledging the magnitude and breath of the current downturn surpasses any it has seen before - is confident the industry will fly high again.
In its newly released Commercial Market Outlook 2020-2039, Boeing said that while aviation has seen periodic demand shocks since the beginning of the jet age, the industry has recovered from demand downturns every time.
“After 9/11 in 2001, followed by the SARS epidemic in 2003, air travel returned to its long-term growth trend by 2004,” Boeing said. “More recently, after the Global Financial Crisis from 2008 to 2009, passenger demand returned to long-term trend in 2011.”
The company said it currently believes it will likely take about three years for air travel to return to 2019 levels, and it will be a few years beyond that for the industry to return to long-term growth trends.
Over the last decade, growth in passenger air travel averaged 6.5% per year, beating the long-term average of 5%, Boeing said.
Boeing expects the current downturn to lead to the replacement of many older passenger airplanes. “This accelerated replacement cycle will position airlines for the future by improving the efficiency and sustainability of today’s fleet,” Boeing said.
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