Crude Oil Closes Mixed Amidst Tighter Supplies

Generally, market sentiment was positive as investors expected a string of improving economic data.

In China, the economy is recovering as its capital markets are attracting money, a good sign for the markets.

Also, traders were keeping an eye on US non-manufacturing activity, German industrial orders for May, and retail sales for the eurozone, all set for this week and expected to be positive.

However, German data showed that the recovery from COVID-19 will be slow and painful. Germany’s industrial orders rebounded moderately in May and 20 percent of firms in Europe’s biggest economy said in a survey published on Monday they feared insolvency due to the pandemic.

The reduction in the supply side of things supported crude oil prices yesterday as production by the Organization of the Petroleum Exporting Countries (OPEC) fell to its lowest in 30 years.

OPEC and other producers including Russia, collectively known as OPEC+, had agreed to lower output by a record 9.7 million barrels per day for a third month in July.

In addition, production in the world’s largest producer is also falling. The number of operating US oil and natural gas rigs fell for a ninth week, although the reductions have slowed as higher oil prices prompt some producers to start drilling again.

On the demand side of things, more US states have reported record spikes in new cases of COVID-19, which has infected nearly 3 million Americans and killed about 130,000.

However, analysts note that the market appears to be shrugging off the surge in COVID-19 cases in the US, adding that data for several cities in affected states did not show a significant reduction in road traffic week on week.