WASHINGTON (DTN) -- Nearest delivery oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange finished the Monday session lower. Investors are looking to the upcoming meeting among members of OPEC+ coalition scheduled for Tuesday-Wednesday this week at which producers are expected to ease output quotas.
Saudi Arabia and Russia, leaders of 23-nation group of producers, have reportedly agreed to lift supply cuts by 2 million barrels per day (bpd) beginning Aug. 1, bringing collective reductions to 7.7 million bpd. Last month, OPEC+ extended their 9.7 million curbs through July as global demand was slowly picking up pace across major economies.
"The oil market is getting closer to balance... The gradual reopening of the economies and societies around the world has provided a much-needed resurgence in demand," said OPEC's Secretary General Mohammad Barkindo on Monday.
If OPEC+ decides to ease cuts beginning in August, this should not lead to a change in views on the market, with most assuming this scenario. However, continuing deeper curbs would likely signal that demand is in more trouble than previously thought.
U.S. traffic activity showed some signs of leveling off in most recent weeks, correlating closely with COVID-19 resurgence in parts of the country. Preliminary data for July 4 weekend shows gasoline consumption was down nearly 15% compared to the previous week's level, suggesting at least some drivers opted to stay off the roads during the long holiday weekend. The Energy Information Administration reported four-week average demand for motor gasoline in the period-ended July 3 was 12.5% below the corresponding four-week period last year.
Latest figures show new COVID-19 infections jumped by a record 62,000 cases on Sunday, with Florida, Texas and California continuing to lead the national surge. Houston Mayor Sylvester Turner called for a two-week shutdown of the city with Army personal set to arrive Monday to help fight the virus that continues to set record hospitalizations.
In financial markets, U.S. equities retraced earlier gains to end the Monday session little changed as investors weighed the positive news on a vaccine against ever rising COVID-19 cases. A Pfizer-led vaccine on Monday received fast-track status from U.S. Food and Drug Administration. Looking ahead, this week will be clobbered with market-moving economic data and second-quarter corporate earnings.
JPMorgan and Citigroup will kick-off earnings season on Tuesday that is likely to confirm a large decline in corporate profits for S&P 500 companies. Bank of America and Morgan Stanley will report their second quarter earnings on Thursday (7/16). Also this week, U.S. retail sales for June will be released on Thursday and preliminary reading on July's consumer sentiment from University of Michigan on Friday (7/17). Both data points will give deeper insight into the state of U.S. economy as the country continues its battle with coronavirus.
At settlement, West Texas Intermediate August futures dropped $0.45 to $40.10 per barrel (bbl) and international benchmark Brent crude declined $0.52 to $42.72 bbl. NYMEX ULSD August futures fell 1.77 cents to $1.2235 gallon and front-month RBOB futures shed about a penny to $1.2734 gallon.
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