Oil prices swung in volatile trading Monday, continuing a streak of outsize intraday moves with traders worried that a rise in global coronavirus cases will further weaken demand for fuel.
U.S. crude futures for delivery in July were recently down less than 0.1% to $36.25 a barrel on the New York Mercantile Exchange, extending a recent stretch of volatility after they approached $40 last week. Oil prices have staged a powerful recovery in recent weeks since dropping below $0 for the first time ever in late April, lifted by the return of drivers to the roads and record supply cuts by large producers.
But new concerns about the coronavirus threaten to send prices falling again. Chinese health authorities recently shut parts of Beijing and adopted tight controls after the capital confirmed a record number of new Covid-19 infections, a major setback for commodities because China is the world’s largest consumer for raw materials.
In the U.S., the number of coronavirus cases continues to rise in states like Texas and Arizona, also triggering concerns about a fresh round of lockdowns that hurts oil demand. New York Gov. Andrew Cuomo on Sunday threatened to reverse reopening in parts of the state that aren’t following or enforcing coronavirus safety rules.
The fresh anxiety about the pandemic denting global economic growth dragged down a range of investments from stocks to the industrial metal copper Monday. These assets had risen in tandem for weeks, but their momentum has reversed in recent days. In the oil market, investors are particularly concerned that tepid demand will send global stockpiles skyrocketing again.
Cars during rush hour in Beijing, May 18. China is the world’s largest consumer for raw materials.
Photo: roman pilipey/Shutterstock“The potential for [a] second wave of infections—and resulting return to lockdowns—is a key variable in demand recovery,” JPMorgan Chase analysts said in a note.
Brent crude futures for delivery in August, the global gauge of oil prices, were recently up 0.7% at $39.01 a barrel on the Intercontinental Exchange.
Historic supply cuts by the Organization of the Petroleum Exporting Countries and allies like Russia have also helped crude recover in recent weeks, while many North American companies have slashed output and shut in productive wells. Investors are keeping a close eye on global supply, with some companies expected to slowly bring supply back in response to higher oil prices.
Chinese health authorities recently shut parts of Beijing and adopted tight controls after the capital confirmed a record number of new Covid-19 infections.
Photo: stringer/ShutterstockIf crude keeps tumbling back to levels below which most projects are unprofitable, the slide would represent a new threat to an already-battered energy industry.
British energy giant BP PLC said Monday it is writing down as much as $17.5 billion of its assets and might leave some of its oil and gas in the ground, the latest sign of turmoil for large crude producers.
Elsewhere in commodities Monday, most actively traded copper futures fell 1.6% to $2.5590 a pound, also paring some of their weekslong rebound on fresh worries about the global economy. The industrial metal is particularly sensitive to Chinese economic activity because the country accounts for roughly half of the world’s demand.
Write to Amrith Ramkumar at amrith.ramkumar@wsj.com
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