Crude Oil Buoyed by Jobs Report Even as Virus Concerns Escalate

Daniel Fowler
July 4, 2020

Brent crude futures settled at $US43.14 a barrel, rising $US1.11, or 2.6 per cent.

Oil prices rose on Thursday after data showed a fall in US unemployment and a sharp drop in crude stockpiles, although concerns that a spike in USA coronavirus infections could stall a recovery in fuel demand kept gains in check.

"Oil prices have remained rangebound as OPEC has done its job on the supply side, and the key uncertainty now remains on demand recovery", Harry Tchilinguirian, head of commodity research at BNP Paribas, said.

The US PMI, due later on Wednesday, is forecast to show that activity in June continued to recover from an 11-year low in April, while the non-farm payrolls report on Thursday is expected to show the economy added 3 million jobs in June.

Oil has hovered around US$40 a barrel this week as the murkier demand outlook was balanced by the OPEC+ alliance's commitment to reducing output, with Russian Federation showing near total compliance with its targets for a second month.

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Demonstrators claimed the vote featured rife procedural violations, including voting by non-citizens and ballot harvesting. It stood at 60 percent in June according to pollster Levada, down 20 points from the months after his re-election in 2018.

U.S. crude oil imports fell by 571,000 barrels per day (bpd) to 5.97 million bpd for the week ending June 26, and crude oil exports decreased by 65,000 bpd to 3.09 million bpd, according to the EIA data.

OPEC+ is not discussing or planning changes to its production cut agreement, which should see the oil producers ease the cuts in August, Russia's Energy Minister Alexander Novak said at an online conference on Thursday.

Quick fact: Both International benchmarks for crude gained more than 2% yesterday, triggered by positive macros coming from the U.S Job report and falling USA crude inventories. "The threat of a second wave of coronavirus infections is the major wild-card for the oil market". The coalition next meets on July 15. "However, any further lockdown measures by governments are unlikely to have such a harsh impact on oil demand as before" and prices are likely to be relatively well-supported in the second half, he said.

The global benchmark crude's three-month timespread was 25 cents in contango - where prompt contracts are cheaper than later-dated ones - from 41 cents in contango on Tuesday. Exxon Mobil Corp., meanwhile, reported an unprecedented second straight quarterly loss as nearly every facet of the energy giant's business slumped.

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