Oil edges up on tighter supply, but demand concerns check gains

SINGAPORE, June 22 (Reuters) - Oil prices nudged higher on
Monday on tighter supplies from major producers, but concerns
that a record rise in global coronavirus cases could curb a
recovery in fuel demand checked gains.
Brent crude LCOc1 rose 9 cents, or 0.2%, to $42.28 a
barrel by 0009 GMT, while U.S. crude CLc1 was at $39.76 a
barrel, up 1 cent.
Both contracts rose about 9% last week and Brent crude
futures flipped into backwardation, where oil for immediate
delivery costs more than supply later, usually an indication of
tightening supply. LCOc1-LCOc2
In the United States and Canada, the number of operating oil
and natural gas rigs fell to a record low even as higher oil
prices prompt some producers to start drilling again.
Iraq and Kazakhstan pledged to comply better with oil
production cuts during an OPEC+ panel on Thursday.
However, the OPEC+ group, consisting of Organization of the
Petroleum Exporting Countries and its allies including Russia,
has yet to decide whether to extend a record supply cut of 9.7
million barrels per day (bpd) for a fourth month in August.
Oil prices have also been supported by a recovery in fuel
demand globally following a collapse in April-May during
coronavirus shutdowns as countries across the world resume
economic activities.
Still, the World Health Organization reported a record jump
in global coronavirus cases on Sunday, with the biggest increase
seen in north and south America. Spikes in coronavirus infections in parts of the world such
as Beijing and Australia's second-most populous state Victoria
have prompted authorities to reimpose movement restrictions to
curb the spread. "The potential economic damage of a new round of COVID-19
countermeasures will likely contain any investor enthusiasm,"
said Michael McCarthy, chief market strategist at CMC Markets.