Oil mixed on tighter supply, surge in American virus cases

Oil mixed on tighter supply, surge in American virus cases
An employee fills up a car at a gas station in Bangkok. (AFP)
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Updated 07 July 2020

Oil mixed on tighter supply, surge in American virus cases

Oil mixed on tighter supply, surge in American virus cases
  • Brent found some support as investors expected a string of improving economic data

LONDON: Oil prices were mixed on Monday, with Brent crude edging higher on tighter supplies and positive economic data, while US benchmark WTI futures dropped on concern that a spike in coronavirus cases could curb fuel demand in the US.

Brent crude was up 6 cents, or 0.1 percent, at $42.86 per barrel. US West Texas Intermediate (WTI) crude was down 40 cents, or 1 percent, at $40.25.

“We believe that oil market participants are focusing on the current demand trends but are still ignoring the long-term implications of the corona pandemic,” Commerzbank analyst Eugen Weinberg said.

“For now, data for several cities in affected states does not show a significant reduction in road traffic week-on-week,” analysts at ING bank said. Brent found some support as investors expected a string of improving economic data.

In China, the economy is recovering while its capital markets are attracting money, setting the scene for a healthy bull market, the official China Securities Journal said in an editorial on Monday.

Traders were also keeping an eye on US nonmanufacturing activity and retail sales for the euro zone.

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.

The implied volatility for Brent crude has dropped to its lowest since prices started collapsing in March.

Production by the Organization of the Petroleum Exporting Countries (OPEC) has fallen to its lowest in decades.

OPEC and other producers including Russia, collectively known as OPEC+, have agreed to lower output by a record 9.7 million barrels per day (bpd) for a third month in July.