Illustration: Aïda Amer/Axios

Oil prices are recovering as producers slash output and demand starts coming back, but analysts warn there's a big asterisk next to the trend: the trajectory of the coronavirus pandemic.

Driving the news: Brent crude is trading around $31.97 this morning compared to its April trough below $20, while prices for the U.S. benchmark WTI have roughly doubled over the last two weeks to around $28.62.

Where it stands: "Market forces have aligned producers around the world to support fundamentals, and demand is increasingly showing signs of having troughed," Barclays says in a note this morning.

  • But it adds: "Prices are likely to remain under pressure over the very short term, especially amid significant uncertainties regarding the pace of recovery in the broader economy."

Threat level: But prices remain very low, and it will be a long road back as a huge glut is burned off and the global economy remains deeply wounded.

  • And here's the thing: The market's recovery could unravel if easing restrictions creates a surge in new infections, analysts warn.

What they're saying: "We believe stocks will be reduced gradually over the next 12 months or so. All bets though hinge upon avoiding a second wave of the coronavirus, which is yet to be seen as countries remove lockdowns around the world," Rystad Energy's Bjørnar Tonhaugen writes in a note this morning.

  • Vandana Hari of Vanda Insights tells Bloomberg: “Market sentiment has turned cautiously constructive since the end of April and I expect it to remain as such unless there are major setbacks in terms of infection rates.”

Threat level: A lot of the impact of the collapse is too late to avoid — both for the industry and beyond.

  • This year's downturn in oil markets is likely to create a substantial drag on the wider U.S. economy as energy companies slash spending, Dallas Fed economists say in a new analysis.

Why it matters: It shows how the U.S. production boom over the last decade-plus has raised the economic stakes when the industry thrives — or takes a gigantic hit, which is happening now as the sector sheds jobs and cuts spending.

What they found: "The decline in oil and gas capital expenditures will be a major drag on U.S. business fixed investment in second quarter 2020," the report states, noting this investment is an important part of GDP.

  • "We estimate that investment declines in the energy sector alone may lead to a 6.1-percentage-point decline in U.S. fixed investment in the second quarter," it finds (emphasis added).

Go deeper: How oil's collapse will weigh on the U.S. economy

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New turbulence for airlines

Illustration: Sarah Grillo/Axios

The peak leisure travel season — such as it is — is almost over, and without conferences or events to woo business travelers this fall, the airline industry's modest recovery could quickly lose altitude.

Why it matters: Investors have been snapping up airlines as bargain stocks lately — encouraged, in part, by reports of potential progress toward a coronavirus vaccine that could boost depressed air travel.

Exclusive: Conservative group launches $2M Supreme Court ad

Screengrab of ad, courtesy of Judicial Crisis Network.

The Judicial Crisis Network is launching a $2.2 million ad campaign to put pressure on vulnerable Senate Republicans in battleground states to support a quick confirmation when President Trump announces his Supreme Court nominee.

The big picture: "Follow Precedent," previewed by Axios, is one of the first national and cable television ads to run following Justice Ruth Bader Ginsberg's death Friday.

Updated 16 mins ago - Politics & Policy

CDC says it mistakenly published guidance about COVID-19 spreading through air

CDC Director Robert Redfield. Photo: Anna Moneymaker/Pool/Getty Images

The CDC has removed new guidance that acknowledged airborne transmission of the coronavirus, posting in a note on its website that the guidance was only a draft and had been published in error.

Why it matters: The initial update — which was little noticed until a CNN story was published Sunday — had come months after scientists pushed for the agency to acknowledge the disease was transmissible through the air. The CDC previously said that close person-to-person contact was the bigger concern, and the language has been changed back to erase the warning about airborne transmission.