Oil prices climbed Tuesday, rising alongside stocks with more states and countries easing lockdown measures and boosting demand for fuel.
U.S. crude futures for delivery in July advanced 3.3% to $34.35 a barrel, continuing a recent recovery. Prices have rebounded from a collapse in March and April that sent front-month futures below $0 for the first time ever on April 20. The negative pricing meant holders of the futures had to pay buyers to take the contracts due to a lack of available storage.
A global glut of crude has eased in recent weeks, supporting prices. The recovery comes with drivers in much of the world returning to roads and avoiding public transportation to stop the spread of the coronavirus. More states and countries are expected to relax lockdowns in the weeks ahead, fueling optimism about a continued recovery in demand.
Hopes for the development of a vaccine are also boosting oil and other investments like stocks. Novavax Inc. on Monday said it started the first human study of its experimental vaccine. Other companies such as Pfizer Inc. and Moderna Inc. have efforts in human testing, prompting bets that successful development will allow life to return to normal more quickly than expected.
Signs of a recovery in oil demand also come with supply plunging. Companies around the world have responded to ultralow prices by shutting in productive wells and curtailing output, lifting crude prices.
Investors are looking ahead to a June meeting of the Organization of the Petroleum Exporting Countries and allies like Russia to gauge how long supply cuts might last.
Photo: Ernesto Vargas/Associated Press“The oil market is finally coming to a balance soon” with supply expected to match demand, Bjørnar Tonhaugen, head of oil markets at consulting firm Rystad Energy, said in a note.
Brent crude futures, the global gauge of oil prices, advanced 1.8% to $36.17 a barrel Tuesday.
Adding to the optimism: Russian Energy Minister Alexander Novak said during a recent videoconference that the energy ministry expects higher demand to balance the market in the next few months. Russia is part of a historic deal reached last month through which many large producers are lowering supply.
Earlier in the year, a production feud between Russia and Saudi Arabia raised global output as demand crashed, causing the oil-price slide. U.S. crude started the year above $60.
Producers are now slashing supply, with Saudi Arabia pledging to cut production to its lowest level since 2002 next month. Investors are looking ahead to a June meeting of the Organization of the Petroleum Exporting Countries and allies like Russia to gauge how long supply cuts might last. If prices continue rising, analysts expect producers to respond by gradually increasing output.
Elsewhere in commodities Tuesday, most-actively traded copper futures for July delivery rose 1.3% to $2.4185 a pound. Hopes for a quick economic rebound have also lifted the industrial metal recently, as have data points showing a pickup in Chinese manufacturing activity. China is the world’s largest commodity consumer, and growth there is returning to normal after an early-year shutdown.
Earlier
Write to Amrith Ramkumar at amrith.ramkumar@wsj.com
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