Oil Futures Edge Higher

Liubov Georges
By  Liubov Georges , DTN Energy Reporter

WASHINGTON (DTN) -- Nearest-delivery oil futures on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled marginally higher Monday. The market was supported by news of positive vaccine trial results for coronavirus that helped to offset energy-demand concerns tied to the rise in global cases.

At settlement, NYMEX West Texas Intermediate futures for August rose 20 cents to $40.81 per barrel, and the international crude benchmark Brent futures added 14 cents to $43.28 per bbl. NYMEX ULSD August futures moved 1.64 cents to $1.2355 gallon, and the front-month RBOB contract settled up 0.40 cent at $1.2285 gallon.

Risk appetite got a boost "on the back of news that a closely watched coronavirus vaccine being developed by the University of Oxford and AstraZeneca appeared safe and triggered an immune response in trials," said Fawad Razaqzada, at ThinkMarkets.

Still, "Over the past few weeks, crude oil prices have actually been uncharacteristically quiet, suggesting a potentially sharp move could be in the cards soon," he said in a market update. "Hopes over improving demand conditions may keep the bulls happy."

New COVID-19 infections in the United States accelerated to 80,000 new cases on Sunday, triggering fresh lockdown discussions in Florida and California. Market participants increasingly price in a slower near-term demand outlook as the country's most populous states struggle to bring the infection's spread under control.

The impact of the virus resurgence is already being felt in the economic data, with U.S. consumer sentiment index dropping to three-month low at 73.2 in early July, reversing nearly all gains made in a prior month. The domestic economy seemed to have lost its initial post-lockdown surge, with weekly unemployment numbers remaining stubbornly high and new quarantine measures being reintroduced in several states.

Against this backdrop, markets are likely to maintain a cautious tone for much of the session Tuesday, with contracts tied to the Dow Jones Industrial Average settling the session flat and S&P 500 up 0.84%. Traders will also focus on talks over new stimulus packages in the U.S. and Eurozone.

Separately, the U.S. oil rig count declined for an 18th consecutive week through July 18, down one to 180, according to Baker's Hugh data published on Friday. The number of active oil rigs in the United States is now at the lowest level since the first week of June 2009.

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

Liubov Georges