Singapore — 0240 GMT: Crude oil futures were mixed during mid-morning trade in Asia July 6 as the market awaits for fresh drivers to kick start the week.
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At 10:40 am Singapore time (0200 GMT), ICE Brent September crude futures were up 14 cents/b (0.33%) from the July 3 settle at $42.94/b, while the NYMEX August light sweet crude contract was down by 28 cents/b (0.66%) at $40.37/b.
"Crude oil prices rose last week as optimism of a V-shaped economic recovery was strengthened by positive economic data, though some gains were pared on Friday. Falling inventories in the US and stronger US job data boosted positive market sentiment," according to a July 6 note by ANZ analysts.
Nonetheless, rising cases of coronavirus in the US, which led to several states re-introducing movement restrictions continued to dampen the demand outlook. In Florida, new infections rose by more than 10,000 in a day on July 5, for the third time in the last week, pushing the state's total number of infected cases past 200,000. Meanwhile, the situation remains equally dire in Texas, with more than 8,000 new cases on July 4, a new record high, according to media reports.
The newly reported coronavirus case counts and mobility data coming out of the July 4 long holiday weekend in the US will be keenly watched by market participants, which in turn, might determine the short-term direction of crude prices this week.
"The July 4th holiday weekend presents a fat tail risk for oil with gasoline inventories rising last week. If the weekend mobility data suggests muted activity, even if it is only in the Sunbelt states, you will be able to buy barrels cheaper this week," Stephen Innes, chief global markets analyst at AxiCorp, said in a July 6 note.
On the supply front, OPEC+ production, which is at its lowest since 1991, has helped to support oil market sentiment and fundamentals. However, the current record production cuts of 9.7 million b/d, which is set to expire at the end of July and ease into curbs of 7.7 million b/d in August, will likely keep traders cautious. The next OPEC+ Joint Ministerial Monitoring Committee, or JMMC, meeting is scheduled for July 15.
"My view on the JMMC outcome is based on the fact OPEC+ is using more sophisticated models for production targeting, including the oil market curve. If the forward slope does not move into backwardation, I suspect OPEC+ will be more inclined to extend the 9.7 million b/d production cut accord beyond July," Innes added.