Get the latest market trends in your inbox
Stay on top of the latest market trends and economic insights with the Axios Markets newsletter. Sign up for free.
Catch up on coronavirus stories and special reports, curated by Mike Allen everyday
Catch up on coronavirus stories and special reports, curated by Mike Allen everyday
Denver news in your inbox
Catch up on the most important stories affecting your hometown with Axios Denver
Des Moines news in your inbox
Catch up on the most important stories affecting your hometown with Axios Des Moines
Minneapolis-St. Paul news in your inbox
Catch up on the most important stories affecting your hometown with Axios Minneapolis-St. Paul
Tampa-St. Petersburg news in your inbox
Catch up on the most important stories affecting your hometown with Axios Tampa-St. Petersburg
The oil market's recovery from the depths of the pandemic-fueled collapse has gone into reverse lately.
Driving the news: Prices stalled in the low $40s per barrel for the U.S. benchmark WTI several months ago and have been losing ground in recent days.
- WTI and Brent crude, the global benchmark, are both trading at their lowest levels in over two months this morning.
- U.S. prices had slid to $37.45 as we hit publish Tuesday morning, with Brent at $40.46.
Why it matters: They're too low for many producers to profitably drill new wells and ease financial stress, and more bankruptcies are likely.
- Indebted U.S. shale producers and their contractors are especially exposed.
- More broadly, prices shows the tragic global persistence of COVID-19, which has slashed demand for oil, although it is come back a lot from earlier in the year.
The big picture: Analysts say COVID-19 and other forces — including U.S.-China trade tensions and higher OPEC+ supply — are together putting downward pressure on prices as summer winds down.
- "The streak of losses is driven by a stalling crude demand outlook for the rest of the year, with rising cases of COVID-19 and the end of the summer driving season in the US, as well as Asian refineries putting on breaks," Rystad Energy analyst Paola Rodríguez-Masiu said in a note this morning.
Yes, but: Norbert Ruecker of the Swiss bank Julius Baer tells Reuters that the market's macro conditions favor a return to recovery.
- “Fundamentally, things have not changed,” he said. “Demand is recovering, supply remains constrained, and the storage overhang is slowly disappearing.”
Go deeper: COVID-19 remains oil price’s wild card (FT)