SUBMIT PHOTO: The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas, U.S. November 24,2019 REUTERS/Angus Mordant
SINGAPORE (Reuters) – Oil rates provided a mixed market snapshot on Monday, with Brent crude edging higher, supported by tighter supplies, while U.S. benchmark WTI futures dropped on concern that a spike in coronavirus cases could suppress oil demand in the United States.
Brent crude LCOc1 rose 18 cents, or 0.4%, to $4298 a barrel by 0252 GMT after a 4.3%gain last week, while U.S. West Texas Intermediate crude CLc1 was at $4042, down 23 cents, or 0.6%, from its previous settlement on Thursday. U.S. markets were closed on Friday to mark July 4 holiday celebrations.
Amid increasing varieties of coronavirus cases in 39 U.S. states, a Reuters tally showed that in the very first four days of July alone, 15 states reported record boosts in brand-new COVID-19 infections with parties over the vacation weekend possibly causing another spike.
” There will be some kind of decline in need if cases were to increase as individuals will stay at house,” stated Howie Lee, a financial expert at Singapore’s OCBC bank. “The pace of U.S. demand healing will not be as high as anticipated.”
For now, analysts at ING bank said information for numerous cities in affected states reveal no substantial decrease in road traffic week-on-week.
” We will get a better idea of what effect tighter constraints in numerous states have had on gas need with the EIA (Energy Information Administration) report this week,” ING stated in a note.
The implied volatility for Brent unrefined LCOATMIV has actually dropped to the most affordable since costs began collapsing in March as some in the market remain concentrated on tightening up supplies as production by the Organization of the Petroleum Exporting Countries (OPEC) fell to its most affordable in years with Russian output dropped to near targeted cuts.
OPEC and allies consisting of Russia, jointly referred to as OPEC , have actually vowed to slash production by a record 9.7 million barrels per day (bpd) for a third month in July. After July, the cuts are due to taper to 7.7 million bpd until December.
U.S. production, the world’s biggest, is also falling. The number of running U.S. oil and gas rigs was up to an all-time low for a ninth week, although the decreases have actually slowed as greater oil prices trigger some manufacturers to start drilling again.
Reporting by Florence Tan; Editing by Kenneth Maxwell