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Oil was little changed in Asia as signs of an easing in coronavirus cases across the U.S. south were countered by ongoing diplomatic tensions between the Trump administration and China.
Futures in New York slipped 0.3%, after rising 0.5% on Friday. Reported cases and fatalities fell in many states hit hard by the virus, including Florida, Arizona, California and Texas. The daily death toll also dipped under 1,000 for the first time in four days.
U.S.-China diplomatic tensions continued to simmer over the weekend. Beijing slammed the “forced entry” to its Houston consulate by U.S. personnel and vowed to respond “as necessary.” China on Friday ordered the U.S. to close its Chengdu consulate in retaliation after Washington shut down China’s equivalent branch in Houston.
U.S. crude futures gained 1.7% last week, but their recovery from negative territory in April has largely stalled and they have traded in a tight range this month amid signs the pandemic is flaring up again around the world. Schlumberger Ltd. warned Friday that new waves of Covid-19 could derail the nascent recovery in global energy demand.
Yet, crude markets have gathered steady support from the weaker dollar, which is headed for its worst month since the start of 2018 as investors line up to short the greenback.
Oil explorers expanded drilling in U.S. fields for the first time in four months last week, halting a record streak of rig retirements triggered by a Saudi-Russian price war and the virus-driven demand collapse. Energy companies deployed 1 additional rig nationwide this week, bringing the tally of active machinery to 181, according to Baker Hughes Co. data released Friday.
Russian President Vladimir Putin has ordered his government to consider purchasing protection against slumps in crude prices, motivated in part by the desire to gain flexibility in talks with OPEC+ allies, according to people with knowledge of the matter.
