NEW YORK (Bloomberg) --Crude futures in New York rose in tandem with a broader recovery in equities markets, as initial signs that OPEC members intend to comply with promised oil-production cuts assuaged fears that a resurgence in coronavirus cases would send demand back to the worst days of the pandemic.
Futures rose 0.9% in New York after earlier falling as much as 2.6%. The dollar slipped as JPMorgan Chase & Co. reported record trading revenue, helping to support risk sentiment. Saudi Arabia commended Iraq for implementing almost all its pledged oil-production cuts and Nigeria told the kingdom it was committed to hitting its target, in further signs that disputes among OPEC+ members over cheating of quotas are being resolved.
“It’s all about risk appetite and the hope of continued demand growth here,” said Bart Melek, global head of commodity strategy at TD Securities. Iraq and Nigeria pledging to “to live up to their supply cut commitments made investors comfortable to take a long stance on oil. ”
Earlier, prices had fallen amid growing outbreaks of coronavirus, signaling red flags for oil demand, keeping a lid on gains. California, one of the largest gasoline-consuming states in America, said Monday that it would pull back on reopening efforts.
In the longer-term, OPEC expects demand for its crude to rebound next year, surpassing levels seen before the pandemic, as rival producers struggle to revive output. An OPEC+ committee meets Wednesday to discuss easing record supply curbs that have helped the market recover. OPEC+ is expected to stick with plans to taper the cuts from August even as the virus rages in many parts of the world.
West Texas Intermediate for August delivery rose 29 cents to $40.39 a barrel as of 11:39 a.m in New York
Brent for September settlement gained 32 cents to $43.04 a barrel
Gasoline futures fell 2% to $1.2482 a gallon as the spreading virus in the U.S. threatens demand
The OPEC+ committee will consider whether the alliance should keep 9.6 million barrels of daily output off the market for another month, or taper the cutback to 7.7 million barrels as originally planned. Members are leaning toward the latter option, according to several national delegates who asked not to be identified.
Meanwhile, data showed the extent of China’s binge on cheap crude earlier in the year. The world’s top importer bought a record 13 million barrels a day for June arrival, according to customs data, as a long line of vessels carrying cheap oil bought months ago wait to offload shipments.
Other oil-market news:
Middle East producers are banking on robust demand from Asia for their more sulfurous and dense crude, boosting prices for the dirtier oil even as OPEC+ considers loosening cuts.
The coronavirus pandemic will accelerate Eni SpA’s pivot away from conventional refineries to investing in greener facilities.