DTN Oil

WASHINGTON (DTN) -- Shaking off earlier softness, oil and product futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange finished Monday sharply higher, buoyed by rallying equities and hopes that U.S. states battling the resurgence of the coronavirus pandemic will continue to re-open their economies safely in the coming weeks.

At the beginning of holiday-shortened week, investors seemed to set aside concerns over massive new virus spikes in southern states and focus on a general shift towards recovery in global oil demand. Nearly all major economies have now lifted quarantine restrictions that plagued global growth back in March-April, pushing equities and oil prices higher. However, new COVID-19 outbreaks in states like Florida, Texas and Arizona raise concerns that hasty re-openings may have caused more economic damage than previously thought. In the final weeks of June, U.S. consumer sentiment soured across Sun Belt states, while residents in northeastern regions recorded the record-breaking jump in their economic outlook. Surges in new coronavirus cases have now been reported in 36 U.S. states, with at least 12 states pausing their re-opening plans.

U.S. Federal Reserve Member John Williams said on Monday that it's far too early to judge how recovery is going as the situation is evolving rapidly.

Despite a great deal of uncertainty in weeks ahead, U.S. equities staged an impressive rally Monday with the Dow Jones Industrial Index surging 450 points and S&P 500 up 1.5%.

On Monday's session, U.S. benchmark West Texas Intermediate rallied $1.21 to $39.70 barrel (bbl) and Brent crude futures rose $0.69 to settle at $41.71 barrel. NYMEX ULSD contract for July delivery surged 2.91 cents to $1.1654 a gallon and NYMEX RBOB July futures jumped 3.08 cents to $1.1841 gallon, off a better than 3-week low $1.1091 hit earlier in the session.

Markets were also supported by a slew of bullish economic data out of the United States and elsewhere, signaling the global economic recovery gaining traction. China reported its industrial profits climbed this month for the first time since at least November, up 6% after contracting 4.3% in May. The Dallas Federal Reserve reported its manufacturing index was down 6.1% in June versus an expected contraction of 22%. There seems to be a consistent theme of outperformance in some of the manufacturing surveys in the most recent weeks that might suggest markets might be positioning for stronger readings in ISM and Markit surveys -- both due on July 1.

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

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