Oil futures ended largely steady on Monday as positive economic data supported prices, while a spike in coronavirus cases in the United States that could curb fuel demand pressured prices.
“The competing forces in the oil market right now are the reopening of economies around the world, increasing oil demand, countered by concerns about economies closing around the world due to a resurgence in the number of virus cases,” Andy Lipow, president of consultants Lipow Oil Associates.
U.S. services industry activity rebounded sharply in June, almost returning to its pre-COVID-19 pandemic levels, while China’s economy was recovering and its capital markets attracting money, setting the scene for a healthy bull market, the official China Securities Journal said in an editorial.
German data, however, showed that the recovery from COVID-19 will be slow and painful. Germany’s industrial orders rebounded moderately in May and a fifth of firms in Europe’s biggest economy said in a survey published on Monday they feared insolvency.
Oil Market opened today Tuesday downward. Oil price fall on demand concerns from coronavirus case surge.
Oil prices fell on Tuesday, erasing earlier gains, on concerns that the surge in coronavirus cases in the United States, the world’s biggest oil user, will limit a recovery in fuel demand.
The Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia, collectively known as OPEC+, are lowering output by 9.7 million barrels per day (bpd) for a third month in July.
However, those cuts are set to taper to 7.7 million bpd starting next month, adding supply at the same time U.S. fuel demand, especially for gasoline, remains impacted by the COVID-19 outbreak.
“Summer driving demand in the U.S. is low, keeping gasoline demand subdued, and a reintroduction of lockdowns is a major headwind,” ANZ said in a note.
Data from the American Petroleum Institute industry group later on Tuesday and the U.S. Energy Information Administration on Wednesday are expected to show a 100,000 barrel rise in gasoline stockpiles, six analysts polled by Reuters estimated.
The U.S. crude market faces some uncertainties from a court decision on Monday ordering the shutdown of the Dakota Access pipeline, the biggest artery transporting crude oil from North Dakota’s Bakken shale basin to Midwest and Gulf Coast regions, over environmental concerns.
Market sources in the Bakken said the closure of the 570,000-bpd pipeline, while a thorough environmental impact statement is completed, will likely divert some oil flows to transportation by rail.
Oil Future close 6th July, 2020
Brent crude: $43.10 (+0.30) Front Month contract with delivery Sep
Light crude (WTI): $40.63 (+0.39) Front Month contract with delivery Aug
Gasoil ARA; $372.50 (+8.50) Front Month contract with delivery Jul
NY Harbor Ulsd: $382.27 (+4.77) Front Month contract with delivery Aug
The Oil Market is trading at GMT 6.37: Brent -58 cents and WTI -54 cents
Oil Futures closed slightly upward last night but at the start of the day in Europe
Oil Futures are down again. – Expect bunker price small changes if any at all today.