At 2:27 am GMT, Brent futures were up 7 cents/b, or 0.16%, at $43.35/b, while WTI was up by 6 cents/b, or 0.15%, at $40.87/b, and it has continued to rise into the European trading hours.
Prices were offered support by positive news on the development of vaccines as pharmaceuticals and medical institutions are rushing to find a way to counter the world’s worst health crisis in a century.
Nevertheless, data from John Hopkins University showed that while total confirmed cases worldwide are still climbing rapidly, the daily new infections has dropped for four consecutive days from a record high of 252,500 on July 16 to 214,600 on July 19.
Still, market participants are waiting for the inventory report by the American Petroleum Institute and the US Energy Information Administration, due later today and tomorrow, respectively. According to Bloomberg estimates, crude stockpiles probably declined by 750,000 barrels last week, while gasoline inventories have likely dropped for a third week.
On the supply front, OPEC+ has agreed to taper its record production cuts from 9.7 million b/d to 7.7 million b/d — starting from the end of the next week, on the back of an increase in demand and recovery in oil prices. However, US oil production showed few signs of coming back, with a week-on-week drop in the number of oil rigs to 182 for the week ended July 17, significantly lesser than the 780 total rig counts a year ago.
Elsewhere, the impact of China’s monsoon rains and flooding may end up being so severe that state-owned Sinopec ends up completely shutting some plants. The consequent subdued demand for oil products brings focus to the high levels of global inventories and could limit the upside for oil even if worries about China’s slowing demand turn out to be over-emphasized.
On another note, Chevron Corp. said on Monday it would buy oil and gas producer Noble Energy Inc for about $5 billion in stock. This takeover is the major deal since the coronavirus severely dampened oil demand.