Oil climbed to the highest level since early March in London as hopes for an economic recovery from the coronavirus crisis lifted financial markets.
Brent futures rose 2.2 per cent as European Union leaders agreed on an unprecedented stimulus package to pull their economies out of the worst recession in memory, while results of early trials of a virus vaccine developed by the University of Oxford and AstraZeneca Plc showed promising results. U.S. crude inventories probably fell for the third time in four weeks, a Bloomberg survey showed.
Brent for September settlement advanced 95 cents to US$44.23/bbl on the ICE Futures Europe exchange as of 10:54 a.m London time, after rising 0.3 per cent in the previous session.
West Texas Intermediate for August delivery, which expires Tuesday, rose 87 cents to US$41.68/bbl on the New York Mercantile Exchange, after adding 0.5 per cent on Monday.
Still, with the pandemic raging unabated in many regions across the globe and the economic fallout not yet fully realized, the demand recovery continues to face headwinds. In China, the nation’s top refiner plans to cut operating rates at some of its plants this month due to severe flooding.
“The uncertainty for a second-stage recovery in oil prices lies on the demand side,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA. “The recent trading pattern of oil still suggests caution as to whether these developments are a strong enough catalyst to support oil breaking out of its recent range.”
© 2020 Bloomberg L.P.