Oil prices mix as the coronavirus spike overshadows US demand.

By Florence Tan

SINGAPORE (Reuters) – Oil prices offered a snapshot of the mixed market on Monday, with Brent crude rising, backed by tighter supplies, while US benchmark WTI futures fell on concerns that a increase in coronavirus cases could curb demand for oil in the United States.

Brent crude () rose 18 cents, or 0.4%, to $ 42.98 a barrel at 0252 GMT after a 4.3% gain last week, while West Texas Intermediate crude () was at $ 40.42, 23 cents, or 0.6%, from its previous settlement on Thursday. US markets closed on Friday to mark the July 4 holiday celebrations.

Amid a growing number of coronavirus cases in 39 US states, a Reuters count showed that in the first four days of July alone, 15 states reported record increases in new COVID-19 infections with parties during the festive weekend that may possibly lead to another peak.

“There will be some kind of decrease in demand if the cases increase, as people will stay home,” said Howie Lee, an economist at OCBC Bank in Singapore. “The pace of recovery in US demand will not be as strong as expected.”

For now, analysts at ING bank said data from various cities in the affected states do not show a significant reduction in road traffic from week to week.

“We will get a better idea of ​​the impact that tighter restrictions in various states have had on gasoline demand with the EIA (Energy Information Administration) report this week,” ING said in a note.

The implied volatility for Brent crude It has fallen to the lowest level since prices began to collapse in March, as some in the market remain focused on restricting supplies as output from the Organization of the Petroleum Exporting Countries (OPEC) fell to its lowest level. in decades with Russian production falling to near-objective cuts.

OPEC and its allies, including Russia, collectively known as OPEC +, have pledged to cut production by a record 9.7 million barrels per day (bpd) for the third month in July. After July, cuts will drop to 7.7 million bpd through December.

US production, the largest in the world, is also falling. The number of rigs and oil in operation in the United States fell to a record low for the ninth week, although declines have slowed as higher oil prices push some producers to start drilling again.