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Oil rose to levels not seen
since COVID-19 lockdowns paralyzed the world’s largest economy, lifted by signs
of recovering demand and news of a viable coronavirus vaccine.
Futures in New York climbed
8.1% Monday, the highest level since mid-March. Chinese oil use is at 13 million
barrels a day, just shy of the levels of a year earlier, traders and executives
said. Moderna Inc. reported promising early results from an experimental
vaccine, tempering fears of a resurgence of the pandemic and offering hope that
economies can safely reopen.
“Where you’ve seen cases of
individual companies that have reported positive early stage results as it
pertains to any kind of vaccine, that’s been received very well,” Will Rhind,
chief executive officer at GraniteShares, said in a phone interview. “Anything
that leads to a perception of increased demand is beneficial.”
West Texas Intermediate
crude for June delivery settled at a premium to the July contract for the first
time since January. The structure, known as backwardation, suggests that concerns
about storage capacity at the key hub in Cushing, Oklahoma, are easing.
American shale drillers
reduced rigs to the least in more than a decade and Russia pledged strict
compliance with the record OPEC+ cuts. Saudi Arabia didn’t give extra volumes
of oil to three Asian customers who asked for it, according to refiners. At the
same time, OPEC+ oil shipments have seen a “stunning reversal” in May,
according to market intelligence company Kpler. Exports have fallen by 6.4
million barrels a day so far this month, it said.
Demand in the U.S. is
expected to pick up as more lockdowns end. Virus hot spot New York will open a
sixth region on Tuesday and urged major sports franchises to resume playing
without fans, while New Jersey will allow some outdoor recreational areas and
businesses to restart later this week.
However, demand is still in
its nascent stage of recovery and its rebound is fragile. Oil is down about 48%
this year and, while progress is being made toward a vaccine, concerns over a
second wave of the virus still loom over the market.
Prices saw WTI for June
delivery, which expires Tuesday, rose $2.39 to settle at $31.82 in New York.
The more active July contract climbed $2.13 to $31.65 a barrel, while brent for
July settlement advanced $2.31 to $34.81.
The demand recovery is
“positive pretty much across the board,” Stewart Glickman, energy equity
analyst at CFRA Research in New York. “The problem becomes what if reopening
the economy leads to a second wave of cases and then you have a ratcheting back
where everyone has to re-hunker down.”
Credit;shipsandports.com.ng
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