Oil Prices Get Boost from Stronger US Equities
(Bloomberg) -- Oil edged up with support from U.S. equities, but pandemic-driven demand concerns capped the price rebound.
Crude futures in New York managed to close 0.5% higher on Monday, boosted by a stronger equity market. Still, the coronavirus is raging around the globe -- infections flared by a record in Hong Kong, Los Angeles is on the brink of another stay-at-home order and the new rate of people testing positive for the first time in Florida climbed to nearly 15%.
“The rising infection rates are adding doubt to the idea that demand is going to recover uninterrupted,” said Bart Melek, head of global commodity strategy at TD Securities in Toronto. “This virus in no way is done, but continues to be a big issue.”
Crude has been stuck in a holding pattern this month as a resurgence in coronavirus cases in various parts of the world proves demand weakness is here to stay for the near-term. Global virus cases are approaching nearly 15 million. Signals that U.S. companies may start ramping up shale production as the OPEC+ alliance prepares to unleash crude back onto the market next month are also adding to the negative sentiment.
Market participants are also awaiting the next clear signal as to whether American crude inventories, which are sitting at the highest seasonal level in decades, will continue to trend upward.
“What the market really needs to see is, are we at the worst of the inventory problem? Or are we just going to see a continued rise in stockpiles?” said Bill O’Grady, executive vice president at Confluence Investment Management in St. Louis. “Right now, you’re really not seeing much of anything in either direction.”
Prices:
- West Texas Intermediate for August delivery, which expires Tuesday, rose 22 cents to settle at $40.81 a barrel.
- The more-active September futures gained 17 cents to settle at $40.92 a barrel.
- Brent for September settlement added 14 cents to end the session at $43.28 a barrel.
In a further warning sign for the oil market, Chinese demand is cooling off. A rebound in consumption in the Asian giant helped drive crude higher, but the price of physical oil barrels traded in Asia has slipped with the the country’s buying spree slowing in recent weeks.
Other oil-market news:
- Chevron Corp. agreed to buy Noble Energy Inc. for about $5 billion in shares as the oil giant looks to beef up amid the wreckage of the worst-ever crude crash.
- Earlier this month, a federal judge stunned the U.S. energy sector with an order to shut down the Dakota Access pipeline. Environmentalists hailed it as the first time a fully operating system had been forced to close by a legal challenge. As it turns out, it was actually the second time an oil pipeline was ordered shut in a matter of four days.
- Latin America’s fuel consumption is rising, bringing some relief to U.S. refiners that rely on the region for nearly half of their exports.
--With assistance from James Thornhill, Sharon Cho and Rakteem Katakey.
To contact the reporter on this story:
Andres Guerra Luz in New York at aluz8@bloomberg.net
To contact the editors responsible for this story:
Jasmina Kelemen at jkelemen2@bloomberg.net
Jessica Summers, Stephen Cunningham
© 2020 Bloomberg L.P.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- How Likely Is an All-Out War in the Middle East Involving the USA?
- Rooftop Solar Now 4th Largest Source of Electricity in Australia
- US Confirms Reimposition of Oil Sanctions against Venezuela
- EU, Industry Players Ink Charter to Meet Solar Energy Targets
- Analyst Says USA Influence on Middle East Seems to be Fading
- Russian Ships to Remain Banned from US Ports
- Brazil Court Reinstates Petrobras Chair to Divided Board
- EIB Lends $425.7 Million for Thuringia's Grid Upgrades
- Var Energi Confirms Oil Discovery in Ringhorne
- Seatrium, Shell Strengthen Floating Production Systems Collaboration
- An Already Bad Situation in the Red Sea Just Got Worse
- What's Next for Oil? Analysts Weigh In After Iran's Attack
- USA Regional Banks Dramatically Step Up Loans to Oil and Gas
- EIA Raises WTI Oil Price Forecasts
- How Likely Is an All-Out War in the Middle East Involving the USA?
- Venezuela Authorities Arrest Two Senior Energy Officials
- Namibia Expects FID on Potential Major Oil Discovery by Yearend
- Oil Markets Were Already Positioned for Iran Attack
- Is The Iran Nuclear Deal Revival Project Dead?
- Petrobras Chairman Suspended
- Oil and Gas Executives Predict WTI Oil Price
- An Already Bad Situation in the Red Sea Just Got Worse
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Oil and Gas Execs Reveal Where They See Henry Hub Price Heading
- Equinor Makes Discovery in North Sea
- Macquarie Strategists Warn of Large Oil Price Correction
- DOI Announces Proposal for Second GOM Offshore Wind Auction
- Standard Chartered Reiterates $94 Brent Call
- Chevron, Hess Confident Embattled Merger Will Close Mid-2024
- Analysts Flag 'Remarkable Feature' of 2024 Oil Price Rally