July 10, 2020 4:00 PM, EDT

Crude Oil Pares Weekly Decline on Optimism Over Virus Treatment

A silhouetted pumpjack.(Taylor Weidman/Bloomberg News)

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Oil rebounded as a new virus treatment showed promising results, but rising COVID-19 cases continued to weigh on the market.

Oil gained 2.4% in New York on July 10, but is still down for the week. The market followed stocks higher after Gilead Sciences Inc. said its remdesivir treatment cut COVID-19 mortality risk by 62%. Still, the coronavirus pandemic is far from easing around the world and the International Energy Agency said a jump in cases could derail the market recovery.

“If there’s one positive today concerning oil and the virus, it’s the news about remdesivir,” said Michael Hiley, head of over-the-counter energy trading at New York-based LPS Futures. “Still, you can’t help but try and dig into the new virus numbers that come out each day.”

Crude futures rise, paring weekly loss.

Crude has struggled to extend a recent rally as traders weigh fresh outbreaks of the virus. California, Texas and Florida have recorded some of their biggest daily gains in cases and deaths this week. There’s a growing risk that a resurgence will impede efforts to reopen the economy.

“Until the economy is wide open again, it’s hard to imagine oil consistently back up to where it was before the pandemic,” said Hiley.

While the IEA said demand should rebound sharply over the next three months as economic activity resumes, the agency also warned a flare-up of the virus, which is raging across several U.S. states and re-emerging in Asia, is “casting a shadow over the outlook.”

Supply could also become more abundant as Libya’s National Oil Corp. announced it would lift force majeure on all exports following months of near-zero shipments. The Kriti Bastion tanker has started loading 730,000 barrels of crude at Es Sider, with the cargo heading to Italy, according to port operator Waha Oil Co.

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