Crude rises on bargain-hunting, but coronavirus worries linger

Singapore — 0350 GMT: Oil futures rose in mid-morning trade in Asia July 24, as investors looked for bargains following the overnight crude losses after a weak US jobs report fueled growing economic uncertainty.

At 11:50 am Singapore time (0350 GMT), ICE Brent September crude futures were up 16 cents/b (0.37%) from the July 23 settle to $43.47/b, while the NYMEX September light sweet crude contract was up 9 cents/b (0.22%) at $41.16/b.

"Crude oil prices fell amid rising concerns the economic recovery was faltering. A bigger than expected jobless claims number saw equity markets sell off sharply, dragging risk assets lower. This comes only a day after EIA data showed gasoline demand was weakening. Added to that, a surge in the number of coronavirus cases and the outlook for crude oil demand in the US has turned decidedly bearish in recent weeks," ANZ analysts said in a note on July 24.

US weekly unemployment claims climbed by 109,000 to 1.4 million in the week ended July 18, higher than the market estimates of 1.3 million, US Labor Department data released July 23 showed. It was also the first time in nearly four months that initial claims rose, after states halted or reversed reopening plans amid a surge in coronavirus cases nationwide.

Meanwhile, the increasing number of coronavirus cases in the US and worldwide could further exacerbate global growth worries.

Global COVID-19 case counts now stands at 15.4 million, with total deaths at 631,000, latest data from John Hopkins University showed. The daily worldwide infections have also shot back up to a new one-day high of 278,900 for July 22, reversing a five-day consecutive decline in daily cases.

The market, however, has regained some of its lost strength in the recent days amid hopes of a coronavirus vaccine.

On July 22, the US government announced a $1.95 billion contract with Pfizer and a German biotechnology company to supply 100 million doses of a vaccine by December, according to media reports.

"Fortunately for oil markets, recent positive news on progress toward a COVID -19 vaccine may be helping investors remain focused on the longer-term rebalancing. Indeed, the thought of a one-stop recession plugger in the form of a vaccine continues to plank the markets on deeper dips," Stephen Innes, chief global markets analyst at AxiCorp, said in a note July 24.

Separately, the US oil rig count rose by 4 to 206 on the week, rig data provider Enverus said July 23. This is the third consecutive week that oil rig counts have increased, after a 10-rig gain the previous week and one rig the week before that.