Nov 2, 2020 - Energy & Environment

The coronavirus pandemic has the upper hand against oil's recovery

Illustration of a leaky oil barrel with band aids pasted randomly over leaking holes.

Illustration: Aïda Amer/Axios

Crude oil is trading at its lowest levels in over five months as new cases of COVID-19 are rising globally, a bearish sign for the recovery of petroleum demand.

Why it matters: The stalled (and now reversing) price recovery is ominous for the industry, including indebted U.S. producers that were struggling even before the crisis. This year has brought a slew of bankruptcies.

The big picture, via the Financial Times: "The gloomy start to the week came after Boris Johnson, UK prime minister, announced on Saturday tight national restrictions in England just days after Germany and France enacted similar measures."

What they're saying: “Near-term oil fundamentals will continue to deteriorate until the unprecedented rise in COVID infections is brought under control,” PVM broker Stephen Brennock tells Reuters.

What we're watching: Whether OPEC+ will revisit plans to further ease their joint supply curbs at the start of 2021.

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