Oil price is in bearish territory again, perhaps
owing to the fresh outbreaks of coronavirus infections in Europe.
The new infection rate in the US, the world’s
biggest consumer of oil, still poses a serious worry as far as oil markets are
concerned. China, the second largest consumer has kept the virus threat at bay
and India, the third largest consumer still fights the pandemic on many fronts.
The oil price, however, was not subjected to the
wild fluctuations that we saw when this week, when the world’s second or third
largest consumer of oil grappled with the disease.
Markets, however, reacted quickly when Europe showed
that the crisis is far from over as far as their major town and cities are
concerned.
The trend indicates it was just the collective
sentiment rather than fundamentals that caused the uncertainty.
On factual front, however, there are encouraging
signs to the contrary. The EIA, US Energy Information Administration,
consistently indicates that the US oil inventories are on decline – a major
factor that determines the crude oil prices.
Although some world leaders want vehicles powered by
fossil fuels off the road in 10 to 15 years’ time, it will remain just an
aspiration for years to come. Making an
accurate estimate such a period of time ahead is neither feasible nor desirable;
because, so many unexpected things that defy our intelligence can happen during
that time.
Who would have thought a relatively-mild virus could
the world to a standstill in the 21st century, when medical sciences
were so advanced?
Some prominent global personalities keep shoring up
the enthusiasm for vehicles without fossil fuels despite the evidence to the
contrary that show there are here to stay for long time.
The way Tesla’s Battery Day fizzled out without much
impact is yet another indication that our boundless enthusiasm for seeing the
day without fossil fuels and the realities on the ground move on two tracks
with the former at an unsustainable speed.
All in all, the market sentiments over the Second
Outbreak of coronavirus in Europe is a bit inflated and it will be back in a
territory determined by real facts.
