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Oil rises on improving economic data but new coronavirus cases loom
[NEW YORK] Oil prices rose about US$1 a barrel on Monday, after bullish data from Asia and Europe, but investors are wary about sharp spikes in new coronavirus infections around the world.
Brent crude gained 69 cents, or 1.7 per cent, to settle at US$41.71 a barrel. US crude rose US$1.21, or 3.1 per cent, to settle at US$39.70 a barrel.
The recovery of economic sentiment in the euro zone intensified in June with improvements across all sectors, European Commission data showed on Monday. Overall sentiment rose to 75.7 points in June from 67.5 in May, though still short of expectations.
In China, profits at industrial firms rose for the first time in six months in May, suggesting the country's economic recovery is gaining traction.
US stock indexes, which broadly rose on Monday, also added support for oil prices, which at times track with equities.
But fears of a second wave of the pandemic are keeping prices from going higher. The death toll from Covid-19 surpassed half a million people on Sunday, according to a Reuters tally.
Some states in the United States have reimposed restrictions after jumps in cases. California ordered bars to close on Sunday following similar moves in Texas and Florida. Washington state and the city of San Francisco have paused their reopening plans.
"Whilst these localised measures on their own are unlikely to see any major immediate impact on demand, they do highlight the significant risk to gasoline demand," JBC Energy said.
Brent is set to end June with a third consecutive monthly gain after the Organization of the Petroleum Exporting Countries and allies, known as Opec+, extended its 9.7 million barrels-per-day (bpd) supply cut agreement into July.
"Opec+ supply cuts have been helping keep the oil price afloat, and after the stellar nearly 90 per cent compliance in May, in the next few days we will be getting data clues on June compliance," said Louise Dickson, Rystad Energy's oil markets analyst.
Opec has cut oil output in June by 1.25 million bpd from May levels, according to estimates from tanker-tracking company Petro-Logistics.