U.S. producer prices unexpectedly fall; underlying inflation stabilizing By Reuters



© Reuters. Workers prepare free food for distribution at the Chelsea Collaborative in Chelsea

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. producer prices unexpectedly fell in June as rising costs for energy goods were offset by weakness in services, pointing to subdued inflation that should allow the Federal Reserve to keep pumping money into the economy to arrest a downward spiral.

Still, deflation remains unlikely as the economy battles depressed demand caused by the COVID-19 pandemic. The report from the Labor Department on Friday also showed underlying producer inflation ticked up last month.

Deflation, a decline in the general price level, is harmful during a recession as consumers and businesses may delay purchases in anticipation of lower prices. The economy slipped into recession in February. The Fed is injecting money into the economy through extraordinary measures while the government has provided nearly $3 trillion in fiscal stimulus.

“The message for Fed officials, if they needed convincing at all, is that the worst economy since the Great Depression is keeping inflationary pressures on the back burner for now and that interest rates will need to remain at very low levels for the next few years at a minimum,” said Chris Rupkey, chief economist at MUFG in New York.

The producer price index for final demand dropped 0.2% last month after rebounding 0.4% in May. In the 12 months through June, the PPI declined 0.8%, matching May’s decrease.

Economists polled by Reuters had forecast the PPI would climb 0.4% in June and fall 0.2% on a year-on-year basis.

Excluding the volatile food, energy and trade services components, producer prices rose 0.3% in June. That was the biggest gain in the so-called core PPI since January and followed a 0.1% rise in May. In the 12 months through June, the core PPI edged down 0.1%. The core PPI dropped 0.4% on a year-on-year basis in May, which was the largest annual decrease since the introduction of the series in August 2013.

The Fed tracks the core personal consumption expenditures (PCE) price index for its 2% inflation target. The core PCE price index increased 1.0% on a year-on-year basis in May, the smallest advance since December 2010. June’s core PCE price index data will be released at the end of this month.

Stocks on Wall Street were trading higher. The dollar () fell against a basket of currencies. U.S. Treasury prices rose.

SUPPLY DISRUPTIONS

With a record 33 million people on unemployment benefits, inflation is likely to remain soft. Though businesses have reopened after shuttering in mid-March to slow the spread of COVID-19, new cases of the respiratory illness have surged in large parts of the country, causing uncertainty and curtailing domestic demand. Overseas demand has also tanked.

Gross domestic product is expected to have declined in the second quarter at its steepest pace since the Great Depression.

“COVID caused global demand to collapse, which is ultimately deflationary, but it also caused all kinds of supply disruptions, which are momentarily inflationary,” said Chris Low, chief economist at FHN Financial in New York. “The result is generally falling prices amidst a great deal more price volatility than has become the norm in the past decade. Both were on display in this morning’s PPI”.

In June, wholesale food prices decreased 5.2% after surging 6.0% in May. Wholesale energy prices shot up 7.7% in June after rebounding 4.5% in the prior month. Gasoline prices rose 26.3% after accelerating 43.9% in May. Goods prices gained 0.2% last month after jumping 1.6% in May.

Excluding food and energy, goods prices inched up 0.1% last month after being unchanged in May.

The cost of services dropped 0.3% in June after falling 0.2% in the prior month. Services were weighed down by a 1.8% plunge in margins for final demand trade services, which measure changes in margins received by wholesalers and retailers.

A 7.3% drop in margins for machinery and vehicle wholesaling accounted for 80% of the decline in services last month. There were also decreases in the prices for apparel, jewelry, footwear and accessories.

But prices for hospital inpatient care jumped 0.8% after rising 0.4% in May. The cost of healthcare services gained 0.2%after increasing 0.5% in May. Portfolio management fees advanced 2.2%. That followed a 3.9% rebound in May. Those healthcare and portfolio management costs feed into the core PCE price index.



China’s producer prices extend declines but recovery signs emerge By Reuters



© Reuters. FILE PHOTO: Employee works on a production line inside a Dongfeng Honda factory in Wuhan

By Stella Qiu and Ryan Woo

BEIJING (Reuters) – China’s factory gate prices fell for a fifth straight month in June as the coronavirus pandemic weighed heavily on industrial demand, although signs of a pickup in some parts of the sector suggest a slow economic recovery remains intact.

The producer price index (PPI) in June fell 3.0% from a year earlier, China’s National Bureau of Statistics (NBS) said in a statement on Thursday, slower than a 3.2% fall tipped by a Reuters poll of analysts and a 3.7% decline in May.

However, in a sign of potential improvement in the manufacturing sector, PPI rose 0.4% from the previous month, turning around from a 0.4% decline in May.

“The change was driven by an across-the-board increase in raw materials, manufactured goods and consumer goods price inflation,” said Martin Rasmussen, China Economist at Capital Economics, in a note after the data release.

“With fiscal stimulus and infrastructure spending still ramping up, we think that economic activity and producer prices are set to recover further in the coming months.”

Indeed, orders for infrastructure materials and equipment have helped industrial output recover faster in China than most places emerging from COVID-19 lockdowns, but further expansion will be hard to attain without stronger broad-based demand and exports.

ANZ expects China’s PPI will stay in deflation this year, with declines averaging around 2.0% due to the prolonged pandemic.

Even with signs of a moderation in China’s upstream deflation, “it remains debatable if the unprecedented extent of policy stimulus will lead to a quick rebound in industrial inflation,” said Zhaopeng Xing, China Markets Economist at ANZ.

An official survey on the manufacturing sector last week showed activity expanded in June although still at a modest pace, as Beijing’s success in drastically reducing the number of new coronavirus infections allowed it to reopen its economy.

But export orders have continued to contract, reflecting the widespread global impact of the COVID-19 pandemic. Many Chinese manufacturers are grappling with falling profits and have been forced to let workers go to cut costs.

The pandemic, which has infected more than 12 million and killed about 546,000 globally, has sunk world demand and sent many economies into deflation as factories and retailers shut their doors.

The inflation data also showed consumer prices rose 2.5% from a year earlier, in line with forecasts and slightly faster from 2.4% growth in May.

Core inflation – which excludes food and energy costs – remained benign last month at 0.9%,easing from May’s rise of 1.1%.

Some analysts have recently warned of inflationary pressures from the heavy floods across a large part of the country this summer, which could hit vegetable supplies and drive a surge in prices.

China’s economy is expected to return to growth in the second quarter, as it recovers from the sharp contraction in the January-March quarter when the coronavirus outbreak in the mainland reached its peak.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

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In the Physical Oil Market, Sour Barrels Trade at Sweet Prices By Bloomberg



© Reuters. In the Physical Oil Market, Sour Barrels Trade at Sweet Prices

(Bloomberg) — Leaving behind the waters of the Caribbean Sea, the 1,100-feet long oil tanker Maran Apollo is emblematic of the wider petroleum market.

Steaming at 11.5 knots, she’s heading toward China, where oil demand is fast recovering, hauling a cargo of two million barrels of . But her voyage didn’t start a few days ago. She loaded in early May, and with no buyers during the worst of the coronavirus outbreak, the supertanker stood floating in the U.S. Gulf of Mexico for almost two months, waiting for better times.

Only a few days ago, she weighed anchor and left for the Chinese port of Rizhao — a sign that refiners are starting to pull in crude that went unwanted for months.

It’s not any kind oil on board, though. Refiners are competing for barrels in one corner of the market known as medium-heavy sour crude — barrels with a higher content in sulfur and relatively dense. It’s the kind of oil that Saudi Arabia and its allies pump. And also the type of crude that’s pumped offshore in the U.S. Gulf of Mexico — and that’s what’s in the Maran Apollo’s tanks.

Like the wine industry, the oil market has its own vintages: global refiners seek their barrels much like connoisseurs covet bottles of Bordeaux and Burgundy. Urals of Russia and Arab Light from Saudi Arabia are normally two of the most widely consumed — think Cabernet Sauvignon, maybe a Merlot. But in today’s oil market, such crude is in increasingly short supply due to record output cuts by the two nations and their allies.

“Deep OPEC+ cuts and demand recovery have tightened balances and this has been reflected in improvements in physical differentials,” said Bassam Fattouh, director of the Oxford Institute for Energy Studies. “But the recovery has not been even, with medium-sour crudes faring better than light-sweet crudes.”

In normal times, medium-sour crude is usually cheaper than other streams, particularly those known as light sweet crude that have a lower sulfur content and are less dense.

But OPEC, which pumps mostly medium-sour crude, has cut output to the lowest since 1991, and Russia has also implemented brutal reductions. On top of that, medium and heavy sour crude accounts for the bulk of the supplies from Iran and Venezuela, where production has collapsed under the weight of U.S. sanctions and lack of investment.

The market is reflecting the under supply. The price of Urals, Russia’s flagship grade, has surged to a record premium to the benchmark. Last week, it briefly changed hands at $2.40 a barrel above Dated Brent, a regional benchmark, compared with a discount of more than $4.50 a barrel in April, according to traders. S&P Global Platts, a price-reporting agency, assessed the grade at a premium of $1.90 for delivery to Rotterdam on June 29, matching a prior record high.

The surge means that Urals is selling in Rotterdam, the main oil refinery hub in northwest Europe, at roughly $45 a barrel, compared with a low point of about $15 a barrel in early April.

The price pattern is similar for other sour crude streams, from Oman in the Middle East to Oriente in Latin America. All are commanding hefty prices at a time when oil demand globally remains down roughly 10% below normal levels. Because sour crude makes a significant chunk of a typical refinery’s diet, the price increase is strangling the plants’ profitability.

“OPEC+ continues to tighten the screws,” Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd. said, referring to the group’s output cuts.

With the physical oil market tightening, OPEC is now able to increase the prices it charges to refiners. On Monday, Saudi Aramco (SE:), the state-owned oil company, lifted its official selling prices to Asia for the third consecutive month, largely reversing all the discounts it offered during a brief price war with Russia in March and April.

Aramco and other national oil companies sell their crude at differentials to oil benchmarks, announcing every month the discount or premium they’re charging to global refiners. These so-called official selling prices help set the tone in the physical oil market, where actual barrels change hands.

The Saudi oil giant is now selling its most dense crude, called Arab Heavy, for the first time ever, at roughly the same price at its flagship Arab Light, an indication of the strength of the market for the medium-heavy sour grades. Typically, Arab Heavy has sold at a discount of about $2-to-$6 a barrel to Arab Light.

Not only is medium-heavy sour crude trading at a premium to benchmarks, but barrels for immediate delivery are commanding premiums to forward contracts, a price pattern known as backwardation that also reflects a tight physical-market. Dubai crude, a Middle Eastern medium sour barrel, is one example: backwardation between barrels for delivery now and in three months has surged to 60 cents per barrel. In mid-April it stood at minus $9.24 per barrel because the physical market was so glutted back then.

©2020 Bloomberg L.P.



Oil prices fall on demand concerns from U.S. coronavirus case surge By Reuters



© Reuters. The moon rises behind oil storage tanks in Omsk

By Sonali Paul and Seng Li Peng

MELBOURNE/SINGAPORE (Reuters) – 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.

U.S. West Texas Intermediate (WTI) crude () futures fell 17 cents, or 0.4%, to $40.46 a barrel at 0340 GMT, after earlier rising to as high as $40.79.

Brent crude () futures declined by 19 cents, or 0.4%, to $42.91, after hitting an intraday high of $43.19.

With 16 U.S. states reporting record increases in new COVID-19 case in the first five days of July, according to a Reuters tally, there is mounting concern that public health measures to limit the virus spread will curb fuel demand.

Florida is re-introducing some limits on economic reopenings to grapple with rising cases. California and Texas, two of the most populous and economically crucial U.S. states, are also reporting high infection rates as a percentage of diagnostic tests conducted over the past week.

“The potential for demand destruction as lockdown re-instatement looks more likely are combining with concerns about OPEC+ discipline to weigh on oil prices,” said CMC Markets’s Chief Market Strategist Michael McCarthy in Sydney in an email.

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.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

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COVID-19 Spike Prompts Mixed Oil Prices as U.S. Demand Stays Frail By Investing.com



© Reuters.

By Bryan Wong

Investing.com – Oil prices were mixed on Monday morning in Asia as the U.S. reached a record high for new coronavirus cases for the 27th day in a row with twelve states reporting new highs in seven-day case averages.

Montana, Delaware and Alaska are experiencing the biggest percentage increase from past records, while South Carolina, Texas, Arizona, Nevada and California reported record numbers of current covid-19 hospitalizations as of July 6.

In Europe, supply tightened due to a pledge by OPEC and Russia to extend oil production cuts by a record 9.7 million barrels per day for a third month in July. After July, producers expect to keep in place smaller production cuts of 7.7 million bpd until December.

rose 0.19% to $42.88 by 10:36 PM ET (3:36 AM GMT) while slid 0.71% to $40.36.

There are some encouraging signs that the U.S. is heading towards economic recovery.

Warren Buffett’s Berkshire Hathaway (NYSE:) recently made its first deal since the economic downturn caused by the coronavirus, purchasing assets from the U.S.’s second largest energy company Dominion Energy (NYSE:) in a deal worth almost $10 billion.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Oil prices gain on fall in U.S. crude stockpiles By Reuters



© Reuters. FILE PHOTO: A view shows railroad freight car in Omsk

By Julia Payne

LONDON (Reuters) – Oil prices rose on Thursday as a sharp drop in oil stockpiles outweighed concerns that a spike in U.S. coronavirus infections and revived lockdown measures in California could stall a recovery in fuel demand.

Brent crude () futures were up 21 cents or 0.5% at $42.24 a barrel by 1114 GMT, after rising 1.8% in the previous session.

U.S. West Texas Intermediate (WTI) crude () futures rose 20 cents, or 0.5%, to $40.02 a barrel, adding to a 1.4% rise on Wednesday.

U.S. crude inventories fell 7.2 million barrels from a record high last week, far more than analysts had expected, U.S. Energy Information Administration data showed, as refiners ramped up production and imports eased. [EIA/S]

“Typically a drop in inventories signals a positive development in demand or a negative move in supply. But as supply is fairly stable, the market assumes demand stands strong, despite the new COVID-19 infections and restrictions,” said Louise Dickson, oil markets analyst at Rystad Energy.

“New lockdowns in California would have depressed the market any other day, but yesterday’s EIA inventory report balanced the bad news and prevailed.”

New U.S. COVID-19 cases rose by nearly 50,000 on Wednesday, according to a Reuters tally, in the biggest one-day spike since the start of the pandemic.

California rolled back efforts to reopen its economy, banning indoor restaurant dining in much of the state, closing bars and beefing up enforcement of social distancing and other measures.

Capping gains, however, analysts noted that gasoline stockpiles were higher despite expectations of a fall.

Analysts highlighted worries about the spike in cases in heavily populated U.S. sun belt states, which are among the country’s biggest consumers of gasoline.

Attention will be on U.S. driving activity over the upcoming July 4 holiday weekend and how quickly U.S. producers revive shut-in production, analysts said.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Oil prices slip on demand worries, prospect of Libyan supply return By Reuters



© Reuters. FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County

By Sonali Paul

MELBOURNE (Reuters) – Oil prices fell on Tuesday as optimism for a straightforward recovery in fuel demand faded and a looming increase in supply weighed on the market, with Libya’s state oil company flagging progress on talks to resume exports.

U.S. West Texas Intermediate (WTI) crude () futures fell as much as 44 cents, but recovered slightly after stronger-than-expected Chinese factory data. By 0201 GMT they were trading down 26 cents, or 0.7%, at $39.44 a barrel, having jumped 3% on Monday.

futures for September fell 17 cents, or 0.2%, to $41.68 a barrel, paring Monday’s 92-cent gain. The less active August contract, which expires on Tuesday, fell 25 cents after gaining 69 cents on Monday.

Optimism on Monday had been based on strong growth in U.S. pending home sales, bolstering belief that global fuel demand is rising steadily as major economies reopen after coronavirus lockdowns.

But at the same time, coronavirus cases continue to rise in southern and southwestern U.S. states.

“It’s really difficult to say that demand is a one-way street. There are still plenty of risks going both ways,” said Vivek Dhar, mining and energy commodities analyst at Commonwealth Bank of Australia (OTC:).

Bulls will be looking for more signs of a demand recovery in data due on Tuesday from the American Petroleum Institute industry group, and from the U.S. government on Wednesday.

A preliminary Reuters poll showed analysts expect U.S. crude oil stockpiles fell from record highs last week and gasoline inventories decreased for a third straight week.

On the supply side, investors are watching to see whether Libya, which can produce about 1% of global oil supply, is able to resume exports, blockaded since January amid a civil war.

Libya’s National Oil Corp (NOC) said on Monday it was making progress on talks with neighbouring countries to lift the blockade.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

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Gilead prices COVID-19 drug candidate remdesivir at $390/vial in U.S. By Reuters



© Reuters. FILE PHOTO: Gilead Sciences Inc pharmaceutical company is seen during the outbreak of the coronavirus disease (COVID-19), in California

(Reuters) – Gilead Sciences Inc (O:) said on Monday it has priced its COVID-19 treatment candidate remdesivir at $390 per vial in the United States and other developed countries.

Based on current treatment patterns, the vast majority of patients are expected to receive a five-day treatment course using six vials of remdesivir, which equates to $2,340 per patient, the company said.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Oil prices drop for second straight session as coronavirus spike cools demand hopes By Reuters



© Reuters. The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County

By Florence Tan

SINGAPORE (Reuters) – Oil prices slid for a second straight session on Monday as coronavirus cases rose in the United States and other places, leading countries to resume partial lockdowns that could hurt fuel demand.

Brent crude () dropped 72 cents, or 1.8%, to $40.30 a barrel by 0231 GMT, while U.S. crude () was at $37.82, down 67 cents, or 1.7%.

Brent crude is set to end June with a third consecutive monthly gain after major global producers extended an unprecedented 9.7 million barrels per day supply cut agreement into July, while oil demand improved after countries across the globe eased lockdown measures.

However, global coronavirus cases exceeded 10 million on Sunday as India and Brazil battled outbreaks of over 10,000 cases daily. New outbreaks are reported in countries including China, New Zealand and Australia, prompting governments to impose restrictions again.

“The second wave contagion is alive and well,” Howie Lee, economist at Singapore’s OCBC bank said. “That is capping the bullish sentiment that we’ve seen in the last six to eight weeks.”

Other factors restricting oil prices’ advance at this stage include poor refining margins, high oil inventories and the resumption of U.S. production, Lee said.

Despite efforts by OPEC+ – the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia – to reduce supplies, crude inventories in the United States, the world’s largest oil producer and consumer, have hit all-time highs. [EIA/S]

“There is also a risk that gains in prices recently could see some U.S. shale producers restart wells,” ANZ analysts said.

Even as the number of operating oil and rigs dropped to a record low last week, higher oil prices are prompting some producers to resume drilling.

“In the next one-two weeks, we should see an uptick in rig count commensurate with the pick-up in oil production,” OCBC’s Lee said.

Elsewhere, U.S. shale oil pioneer Chesapeake Energy Corp (N:) filed for bankruptcy protection on Sunday as it bowed to heavy debts and the impact of coronavirus outbreak on energy markets.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Oil prices creep up on demand recovery, tempered by virus outbreaks By Reuters



© Reuters. FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County

By Sonali Paul

MELBOURNE (Reuters) – Oil prices rose on Friday, extending gains from the previous day on optimism about recovering fuel demand worldwide, despite a surge in coronavirus infections in some U.S. states and indications of a revival in U.S. crude production.

U.S. West Texas Intermediate (WTI) crude () futures gained 42 cents, or 1.1%, to $39.14 at 0150 GMT but were on track for a slight drop for the week.

Brent crude () futures similarly rose 1.1%, or 47 cents, to $41.52, but were also heading towards a small decline for the week.

Overall, commodities markets were taking a positive view on the global recovery on Friday despite worries about coronavirus flare-ups, said Michael McCarthy, chief market strategist at CMC Markets.

“It does appear the market is ignoring supply and demand fundamentals and moving on sentiment,” he said.

Analysts said satellite data showing strong pick-ups in traffic in China, Europe and across the United States pointed to a recovery in fuel demand.

Congestion in Shanghai in the past few weeks was higher than in the same period last year, while in Moscow traffic was back to last year’s levels, data provided to Reuters by location technology company TomTom showed.

However, there are fears a spike in COVID-19 infections in southern U.S. states could stall the demand recovery, especially as some of those states, such as Florida and Texas, are among the biggest gasoline consumers.

“The risk of a fresh outbreak could hit the recovery in demand,” ANZ Research said in a note.

The prospect of increased U.S. crude production also kept a lid on gains on Friday.

A survey of executives in the top U.S. oil and gas producing region by the Dallas Federal Reserve Bank found more than half of executives who cut production expect to resume some output by the end of July.

WTI would have to be between $36 and $41 a barrel for a majority of producers to restore output, nearly a third said in the survey. Another 27% said prices would have to range between $41 and $45 per barrel.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.