Oil ended the most tumultuous of half years and quarters that the commodity has had to endure, with the price of the key US marker crude, West Texas Intermediate contract falling to record lows around $US37 a barrel in April.
While prices recovered, the onset of the coronavirus pandemic has slashed demand for oil and gas, forcing companies large and small to slash production, investment and jobs with several big US producers collapsing – frackers Whiting Petroleum and Chesapeake Energy Corp.
Now prices are drifting as traders wait to see how the world’s economies handle the continuing recession.
Production cuts by OPEC and Russia and across the entire US industry have helped steady prices, but concerns continue of cheating by OPEC members and fears that under pressure uS companies will soon boost production to generate cash flow to repay debt.
Tuesday saw US futures trade lower as the persistent concerns about the rising number of cases of COVID-19 and the threat of more oil flowing out of the Middle East more than offset upbeat reports yesterday suggesting both China’s manufacturing and service sectors continue to improve slowly.
The global tally for confirmed cases of the coronavirus that causes COVID-19 rose to 10.3 million on Tuesday, according to data from Johns Hopkins University. The number of deaths climbed to 505,518.
A steady climb in the number of infections – especially in the US where the number now tops 40,000 a day – has raised the threat of delaying or reversing efforts to reopen economies.
“The relatively promising economic data cannot shake off the fear of a second wave of the Covid-19, especially in the US, which is again imposing social distancing restrictions in big economic states like California, Texas, and Florida,” wrote Louise Dickson, oil markets analyst at Rystad Energy, in a Tuesday research report, according to Marketwtach.com.
On Tuesday, West Texas Intermediate crude for August fell 59 cents, or 1.5%, to settle at $US39.10 a barrel in New York, after a 3.1% gain Monday.
So far this year, prices fell by around 36% but for the quarter, however, prices were up around an unrealistic 91%.
In Europe, Brent oil for August delivery dropped 62 cents, or 1.5%, to trade at $US41.09 a barrel.
Prices were down by around 38% for the half, but up nearly 57% for the quarter.