DTN Oil

WASHINGTON (DTN) -- At the beginning of the holiday-shortened week, oil and product futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange pared overnight losses to trade mixed, with the front-month RBOB contract remaining under pressure as the recent surge of coronavirus cases in the United States is seen undermining progress in re-opening the national economy and denting the outlook for driving demand.

Nine of the top twenty gasoline-consuming U.S. states are showing an upward trend in new COVID-19 cases, according to the latest data released by John Hopkins University. Governors from Texas and Florida are enacting new measures to help contain the outbreak, forcing re-closure of bars, beaches and new bans on mass gatherings. Both states continued to register record-high daily increases in new coronavirus cases over the weekend, with the number of filled Intensive Care Unit beds nearing maximum capacity in several counties. The outbreak so far remains localized but raises concerns over the path for fuel demand recovery with more flare-ups expected during the fall-winter months.

A recent survey by the Federal Reserve Bank of Dallas found around 51% of respondents expect demand not to return to pre-pandemic levels until the fourth quarter 2021 or later.

Globally, coronavirus infections topped 10 million and death toll surpassed 500,000 on Sunday, with sharp increases recorded in Brazil, India, Russia and some parts of Asia.

Global equities slumped to a near two-week low on Monday, while U.S. major indexes look for a firmer open to a holiday-shorted week. Dow Jones Industrial look to recoup 100 points and contracts tied to S&P 500 up 0.14%.

In early trading, U.S. benchmark West Texas Intermediate was little changed near $38.50 per barrel (bbl) after slumping lower in overnight activity and Brent crude futures were steady at $41 barrel. NYMEX ULSD contract for July delivery were little changed near $1.1363 a gallon and NYMEX RBOB July futures eroded 2.25 cents to a better than two-week low $1.1308 gallon, hammered by the latest downturn in major centers for U.S. gasoline consumption.

Separately, one of the largest U.S. shale oil company Chesapeake Energy filed for bankruptcy protection on Sunday as heavy debts and demand destruction caused by coronavirus pandemic seemed to have pushed the company over the brink. The move marked the biggest oil & gas bankruptcy in five years. Its Chapter 11 filing, citing $10 billion in debts, would affect drilling firms and gas transporters from Texas to Wyoming to Pennsylvania.

Meanwhile, U.S. shale oil showed first signs of rebound last week. Baker Hughes reported a one rig decline in the U.S. oil rig count for the week ended June 26, suggesting the 15-week string of rig deactivations in the U.S. is about to end.

A survey of executives in the top U.S. oil and gas producing region by the Dallas Federal Reserve Bank found more than half of executives who cut production expect to resume some output by the end of July.

Liubov Georges can be reached at liubov.georges@dtn.com

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