Oil market: Muddle of contradictions as traders size up prospects for 2020

China’s oil stockpiles are near a record despite the return of traffic jams and rising industrial activity. America’s inventories are slumping even though people don’t seem to be driving much. The Organization of the Petroleum Exporting Countries (Opec) and allied producers are still withholding millions of barrels from the global market to avert a glut, but there are indications some exporters are wavering in their commitment to the pact.

The oil market, whipsawed by some of the most violent ups and downs in its history in the first of half of the year, is a muddle of contradictions as traders size up prospects for the rest of 2020. As prices stick to a narrow range near $40 a barrel, some of the biggest commodity houses, including Vitol Group, Trafigura Group, and Mercuria Energy Group, have diverging views about what’s next. The most important factor will be Covid-19 itself: Cases are surging again in the US and Europe, two vital demand centres. While Asia, in particular China, is faring better in terms of how the disease is being coped with, the economic impacts of the virus will nevertheless be felt for years. And, what about a vaccine? Goldman Sachs says it’s worth betting on jet fuel prices strengthening because one will likely be found and people will start flying again.