Crude oil futures climbed higher amid improved global demand outlooks, but concerns that rising COVID-19 cases in the US could send more states into lockdown weighed on refined product prices July 14.
NYMEX August WTI settled 19 cents higher at $40.29/b and ICE September Brent was up 18 cents day on day at $42.90/b.
Improved OPEC crude demand forecasts released July 14 pulled oil futures off overnight lows in early US trading. In its closely watched Monthly Oil Market Report, OPEC revised upward its forecast of 2020 oil demand by 130,000 b/d to 90.72 million b/d.
And in its first 2021 market outlook, OPEC projected oil demand would surge to 97.72 million b/d -- still below pre-pandemic levels but a sharp recovery from the hard-hit second quarter of 2020.
"There is a sense that the late sell-off yesterday was over done and we are rebounding," Price Futures Group senior market analyst Phil Flynn said. "The COVID-19 fear sell-off is coming off."
Record China crude demand and rising equity markets added to bullish sentiment, Flynn said.
China's crude oil imports rose 34.4% year on year to an all-time high of 12.99 million b/d, or 53.18 million mt, in June as Chinese buyers who had rushed into the market to secure cheap crudes in late March received their deliveries in the month, preliminary General Administration of Customs data showed July 14.
It was the first time China's monthly crude imports surpassed 12 million b/d, and were 14.6% higher than the previous record high of 11.34 million b/d in May, GAC data showed.
The crude price rally came even as the market braced for a confirmation on July 15 that the OPEC+ group would allow its production quotas to ease as planned next month.
The group, comprised of OPEC and ten allies including Russia, is set to roll their current 9.7 million b/d production cut quota back to 7.6 million b/d in August. A key OPEC+ monitoring committee is scheduled to meet online July 15 to review the plan.
"The market is starting to realize that the way global demand is coming back, maybe 2 million b/d isn't a deal breaker," Flynn said.
But fears of a second-wave of the coronavirus pandemic hitting demand capped the rally, and sent refined product futures lower.
NYMEX August ULSD settled down 27 points at $1.2208/gal and August RBOB was 2.6 cents lower on the day at $1.2474/gal.
The seven-day moving average of new coronavirus cases in the US reached an all-time high July 13 to nearly 61,000, according to Johns Hopkins University data.
California, on July 13, joined a number of other US states, including Texas and Florida, in reversing some reopening measures in an effort to combat rising cases.
