Oil mixed on upbeat economic data, uptick in virus cases

Sharp spike in new infections has forced some countries to re-impose partial lockdowns

LONDON:

Oil prices were mixed on Monday, supported by improving economic data and supply cuts by major producers, but held in check by sharp spikes in new coronavirus infections around the world that have forced some countries to re-impose partial lockdowns.

Brent crude LCOc1 fell $0.02, or 0.1%, to $41 a barrel by 1341 GMT and US crude CLc1 was up $0.12, or 0.3%, at $38.61.

Crude prices found some support as profits at China’s industrial firms rose for the first time in six months in May, suggesting the country’s economic recovery is gaining traction.

The recovery of economic sentiment in the euro zone also intensified in June after a modest pickup in May, with improvements across all sectors and a much more buoyant sense of future business, European Commission data showed.

However, fears of a second wave of the pandemic took shine off the improving economic data. The death toll from Covid-19 surpassed half a million people on Sunday, according to a Reuters’ tally.

“Looking ahead, anxiety is likely to remain heightened as the epic fight against the coronavirus pandemic continues. This spells bad news for risk assets (such as oil), which will inevitably remain under pressure,” said Stephen Brennock of broker PVM.

In the United States, California ordered bars to close on Sunday following similar moves in Texas and Florida after a jump in cases. Washington state and the city of San Francisco have paused their reopening plans.

“Whilst these localised measures on their own are unlikely to see any major immediate impact on demand, they do highlight the significant risk to gasoline demand,” JBC Energy said.

Oil also found some support from the dollar’s weakness. Oil prices tend to move inversely to the US currency.

Brent is set to end June with a third consecutive monthly gain after the Organisation of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, extended an unprecedented 9.7-million-barrel-per-day (bpd) supply cut agreement into July.

OPEC has cut oil output in June by 1.25 million bpd from May levels, according to estimates from tanker-tracking company Petro-Logistics.

Iraq’s oil exports have fallen by almost 9% or 310,000 bpd in June, loading data and industry sources showed, suggesting OPEC’s second-largest producer has delivered about three-fifths of its pledge under the deal.