Oil rose on Monday as more countries announced they would begin easing coronavirus lockdowns and crude supply cuts take hold, though a fresh spat between the United States and China over the origin of the virus limited the rise in prices.
Worldwide fuel demand fell by an estimated 30% in April largely due to stay-at-home orders, and weak consumption is expected to overhang the crude market for months, even as major world oil-producing nations and companies quickly reduce output. However, analysts have said that swift action by those parties could help reduce the supply glut more quickly.
"The bigger picture, while not great, is looking more constructive as countries around the world are reopening and that's going to increase oil demand at the same time OPEC-plus is cutting production and production is falling elsewhere around the world due to economics," said Andy Lipow of Lipow Oil Associates in Houston.
Italy, Finland and some U.S. states were among a number of countries moving to ease lockdown restrictions on Monday to resurrect their economies, but officials cautioned against moving too swiftly as globally, coronavirus cases passed 3.5 million and deaths neared a quarter of a million.
In addition to fresh cuts that began this month by the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, oil and gas output from some of the world's top oil companies is set to drop in the second quarter of 2020 to levels not seen in at least 17 years.
Goldman Sachs said it is growing more optimistic about the rise of oil prices next year due to lower crude production and a partial recovery in oil demand.
The Wall Street bank raised its 2021 forecast for global benchmark Brent to $55.63 per barrel from $52.50 earlier. The bank hiked its estimate for WTI to $51.38 a barrel from $48.50 previously.
The re-emergence of trade tensions between the United States and China limited the rise in prices.
"Demand growth in China is good for the energy market right now, it is pretty much the only game in town" said Bob Yawger, director of energy futures at Mizuho. "Even a verbal scrap with President Trump is not good for China demand growth, considering the fragile circumstances the market is currently operating under."
Adding to U.S. President Donald Trump's threat last week to impose tariffs on China, Secretary of State Mike Pompeo said on Sunday there was "a significant amount of evidence" that the new coronavirus emerged from a Chinese laboratory.
Oil prices recovered some of their losses after U.S. Treasury Secretary Steven Mnuchin said he expected China to make good on its trade agreement with the United States. He also said he expected oil markets to rebound, and that the Trump administration was looking for more storage capacity.