Oil Erodes Gains as Virus Concerns Keep Bulls in Check

  • Bloomberg
  • Commodities News
Oil Erodes Gains as Virus Concerns Keep Bulls in Check
Credit: © Reuters.

(Bloomberg) -- Oil drifted lower in Asia as the continued rise in coronavirus cases across the globe continued to overshadow the prospects for a demand recovery.

Futures in New York fell 0.3%, after rising 0.5% on Monday on the back of firmer equities. Results from a vaccine trial in the U.K. initially gave the market a lift, but the rally faded after analysts said that the data, while good, weren’t as stellar as hoped for.

California, Florida and Arizona all reported a slowdown in the increase of new virus cases. New York Governor Andrew Cuomo threatened to close down all bars and restaurants if large street gatherings continue and his social distance and mask regulations aren’t enforced.

Crude has been stuck in a holding pattern this month as a resurgence in coronavirus cases in various parts of the world proves demand weakness is here to stay for the near term. Global virus cases are approaching nearly 15 million. Signals that U.S. companies may start ramping up shale production as the OPEC+ alliance prepares to unleash crude back onto the market next month are also adding to the negative sentiment.

In a further warning sign for the oil market, Chinese demand is cooling off. A rebound in consumption in the Asian giant helped drive crude higher, but the price of physical oil barrels traded in Asia has slipped with the the country’s buying spree slowing in recent weeks.

Read: A Pipeline Is Quietly Ordered Shut in New Signal of Shale’s Woes

Chevron Corp. (NYSE: CVX ) agreed to buy Noble Energy Inc (NASDAQ: NBL ). for about $5 billion in shares as the oil giant looks to beef up amid the wreckage of the worst-ever crude crash. The takeover is the industry’s first major deal since the coronavirus triggered a severe slump.

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