View in browser Related ArticlesBy Julia Horowitz • Wednesday, May 20 Good morning. In today's newsletter: Oil prices are recovering, but is it too much, too soon? Plus, Asia's richest man is trying to build the next global tech giant, and Wall Street gets a vaccine reality check.
US stock futuresin Europe were mixed in early trading, following stocks in Asia.
▸ Forwarded this newsletter? Want global markets news and analysis from Cnn Business reporters every morning? You can sign up here. What's happening now in markets: ADVERTISEMENT MARKET FLASH Oil prices are recovering. Is it too much, too fast? What a difference a month makes. Oil prices — after dropping to historic lows in April — have moved away from the cliff edge, pushing higher as demand for energy picks up, more producers keep crude in the ground and concerns about insufficient storage ease.
What's happening: West Texas Intermediate futures, the US benchmark, were last trading above $32 per barrel, having gained more than 70% this month. Brent Crude Futures, the global benchmark, were last trading at $35 per barrel, a 39% monthly rise.
Prices are still extremely depressed — Brent crude futures were trading near $69 per barrel at the start of the year. But it's clear that the process of rebalancing supply and demand is underway.
"We are now at a stage of more stability in the market," Paola Rodriguez-Masiu, senior oil markets analyst at Rystad Energy, told clients Wednesday. "Market volatility with huge daily swings would be unexpected and unjustified." Still, some on Wall Street are worried that the comeback has been too swift, and could cause further damage down the line.
UBS analyst Giovanni Staunovo said in a research note Wednesday that he believes inventories at the US storage hub in Cushing, Oklahoma likely peaked in early May. Meanwhile, record cuts launched by OPEC and its allies earlier this month, along with voluntary cuts by other producers, have helped reduce the supply glut as some restrictions on movement are lifted.
This supports higher prices. But Staunovo is concerned that the rally could "prove self-defeating," since it's likely to encourage some producers to ramp up output again.
The trajectory for oil demand also remains hugely uncertain, even as lockdowns are loosened.
"While gasoline demand has staged a strong recovery as people go back to work, there are still several unknowns regarding the extent to which oil demand will ultimately recover," Staunovo wrote.
Policymakers around the world have voiced their own concerns in recent days about the nature of the eventual economic recovery.
UK finance minister Rishi Sunak said Tuesday that it's not obvious there will be an "immediate bounce back" for the UK economy after the coronavirus pandemic recedes.
It will "take time for people to get back to the habits that they had," he added.
VOICES The Federal Reserve is ready to deploy more stimulus "We have to take a step — ask, 'Is it enough?' — and we need to be prepared to act further. And we are if the need is there."
FEDERAL RESERVE CHAIR JEROME POWELL (TESTIFYING BEFORE THE US SENATE)
Read more from CNN Business. EYE ON ASIA How Asia's richest man is trying to build the next tech giant Mukesh Ambani wants to build the next global technology company. And if he plays his cards right, his mobile carrier and tech juggernaut JioPlatforms could soon hold rank alongside Google, Amazon, Alibaba and Tencent, my CNN Business colleague Sherisse Pham reports.
The "ultimate goal," according to Counterpoint Research analyst Tarun Pathak: to become everything to every Indian, and build an indispensable platform for the country's hundreds of millions of internet customers.
Watch this space: The Facebook partnership is still awaiting regulatory approval, and Facebook has pushed back on the idea that it is helping Ambani build a "super app," noting that the two companies will continue to operate separately in India. But the collaboration gives both parties new clout in India's massive market. |