By Barani Krishnan
Investing.com – Forget that we will meet again on Monday. Or that the US for September will be released on Friday.
Think instead of Merck’s Friday Covid Pill announcement that just happened, as it could be riskier in the short term than anything else.
For those who remember, global risk assets received a major shot when the effectiveness of the Covid-19 vaccine ( Pfizer (NYSE 🙂 95%, Moderna (NASDAQ 🙂 94%) were first announced in November. Brent, the international benchmark for oil, jumped 27% that month alone, and is already up 53% this year.
Admittedly, it is still early days for the Merck pill, the first oral drug of its kind against the coronavirus. Despite the early euphoria over the vaccines, their rollout was not quite so imagined, with poorer regions of the world still awaiting doses while policy keeps large numbers of unvaccinated people in the poorest countries. more privileged.
What is evident is that nations are pushing to keep their economies open despite the Covid terror reintroduced by the Delta variant. But what also prevents many from resuming “normal life” is fear as much as the new workloads which continue to increase from time to time.
For the record, Merck (NYSE 🙂 claims that the molnupiravir pill it jointly developed with Ridgeback Biotherapeutics reduced the risk of hospitalization or death by approximately 50% in unvaccinated patients.
The effectiveness of molnupiravir was not affected by the timing of symptom onset or the patients’ underlying risk factors, the Merck study showed. It has also been shown to be consistently effective in treating all variants of Covid, including the widely dominant and highly transmissible Delta.
Merck says it has already started producing molnupiravir. The pharmaceutical giant plans to produce 10 million courses by the end of 2021, and more doses in 2022.
The company agreed earlier this year to supply the United States with about 1.7 million cycles of molnupiravir pending emergency clearance for the drug from the Food and Drug Administration. The federal government also has the option of purchasing additional doses if the drug is approved, White House coronavirus response coordinator Jeff Zients said in a briefing Friday.
Merck has entered into supply and purchase agreements for the drug with other governments – pending regulatory approval – and is in discussions with other governments over the supply of molnupiravir.
The company plans to implement a tiered pricing approach based on World Bank country income criteria to ensure access to molnupiravir globally. Merck previously announced that it had entered into voluntary non-exclusive licensing agreements for molnupiravir with generic manufacturers, an initiative to help low- and middle-income countries access treatment. These agreements are also awaiting emergency approvals or authorizations from local regulators.
As Merck awaits FDA approval for the pill, the idea of a game changer in recovery that might be more palatable than a vaccine could drag the markets into a new fervor of risk.
In addition to boosting risk appetite, the pill could help spur the recovery in employment in greater numbers, convincing the Federal Reserve to boldly decide on its reduction in stimulus and possible rate hike. Yes, bulls salivating on new highs in oil and stock prices shouldn’t forget the prospect of faster Fed action either.
With the threat of increasingly insane inflation, getting people back to work and fixing broken supply chains should be a higher priority, even if it means attracting higher interest rates that could temper markets. bullish.
Oil market and price rounding
Oil had its best of three months in September, gaining nearly 10%. It also made a solid start for October, building on the euphoria over Merck’s Covid pill, despite OPEC + reportedly planning to bring more barrels to market than initially expected.
New York-traded, the benchmark for US oil, settled the first October session up 85 cents, or 1.1%, to $ 75.88 a barrel. For the week, WTI was up 2.6%. For September, it gained 9.5%, its highest since June. For the third quarter, the benchmark US crude index rose 2%.
Crude traded in London, the global benchmark for oil, ended Friday’s session at $ 79.28 a barrel, up 97 cents, or 1.2%. Brent rose 1.9% on the week. For September, it gained 7.6%, its highest level since June. For the third quarter, the benchmark world crude rose 4.5%.
OPEC + – comprising the 13 members of the Saudi Arabia-led Organization of the Petroleum Exporting Countries and a group of 10 other Russian-led producers – is considering going beyond its existing deal to increase production of 400,000 barrels a day at its meeting next week, four sources familiar with alliance thinking have been reported.
The move came amid oil prices at their highest for nearly three years and consumer pressure for more supplies, the sources said.
While OPEC + initially blocked requests for more crude over the summer from a White House trying to suppress inflation, “this time it’s different,” said Ed Moya, analyst for the OANDA online trading platform.
“OPEC + could easily justify providing more than the 400,000 bpd incremental increase in November and they should probably consider doing so,” Moya said. “The energy crisis could trigger massive volatility and weigh on the outlook for global growth, so OPEC + should consider an adjustment.”
prices jumped 35% in U.S. trade in September, fearing that the entire northern hemisphere – which includes North America, Europe, the northern two-thirds of Africa and most of Asia – could run out of fuel for power generation in the coming months, as well as heating in winter.
The ripple effect of gas has even led to a doubling of the price of coal – the world’s least valued commodity from an environmental point of view. Australian thermal coal from the port of Newcastle, the benchmark for the vast Asian market, has climbed 106% this year to more than $ 166 per metric tonne, according to tariff data at the end of September.
“People are starting to use the word ‘crisis'” when it comes to Europe, John Kilduff, partner of hedge fund Again Capital in New York, told CNBC. “Europe is squarely behind the eight ball before the winter season. This will put the emphasis on this product which has been overlooked in recent years. ”
The price of keeping the lights on in Spain has tripled, reflecting a larger increase in electricity bills in the EU in recent weeks. Spain, Italy, Greece, Britain and others are planning national measures, ranging from subsidies to price caps, to protect citizens from rising costs as economies recover from the Covid-19 pandemic.
Gold market and price rounding
A sign that the worst may be over – for now – gold made a modest gain at the start of trading for October, joining most of the risk assets trying to recover from the hellish race in September.
A pullback in both the and gold also allowed gold to post a second straight week of gains, however small.
The most active US gold futures contract,, settled Friday’s trade at $ 1,758.40 an ounce on the New York Comex, up $ 1.40, or 0.1 %.
For the week, it managed a 0.4% gain despite Thursday’s 2% drop that contributed to the scorching 3.4% loss in September.
“We can see gold benefit from some safe haven flows as the outlook becomes increasingly uncertain,” said Craig Erlam, analyst at online trading platform OANDA.
“It will be interesting to see if he can maintain those gains if risk aversion continues in the weeks to come. Many obstacles remain on the rise, which will make any ascent very difficult. The first of these is $ 1,760 where it encountered resistance yesterday, followed by $ 1,780. “
Upcoming Energy Markets Calendar
Monday October 4
Cushing crude inventory estimates (private)
Tuesday, October 5
weekly oil inventory report.
Wednesday October 6
Weekly EIA report on
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Thursday October 7
Weekly EIA report on
Friday October 8
Baker Hughes Weekly Survey of
Disclaimer: Barani Krishnan uses a range of perspectives outside of his own to bring diversity to his analysis of any market. For neutrality, it sometimes presents contrarian views and market variables. He does not hold a position in the commodities and securities he writes about.