Oil climbs with Saudi Aramco seeing demand recovery continuing

Oil snapped a two-day losing streak as Saudi Aramco predicted demand will continue to improve through the rest of the year, despite many regions across the world struggling to bring the coronavirus under control.

Crude consumption in Asia is almost back to pre-virus levels, Aramco Chief Executive Officer Amin Nasser said Sunday after the world's top exporter reported a slump in second-quarter profit.

Meanwhile, oil drilling in the U.S. fell to a 15-year low as explorers abandoned growth plans and as billions of barrels from old discoveries became worthless.

Oil is showing some signs of potentially breaking higher after being stuck near $40 a barrel since early June as rising virus infections raised doubts about a sustained recovery. However, OPEC+ is set to test the appetite for demand, returning some supply to the market from this month following historic production cuts.

The demand recovery is better than expected and that's supporting prices, said Michael McCarthy, chief market strategist at CMC Markets Asia Pacific. The easing of OPEC+ cuts has already been priced in, but sentiment is mixed toward an economic recovery through the second half of the year, he said.

Oil demand is around 90 million barrels a day, Aramco's Nasser said, compared with pre-pandemic levels of roughly 100 million barrels a day. The state-controlled company reported a 73% slump in second-quarter net income after crude prices collapsed following a crash in consumption.

In the U.S., the number of active drill rigs fell by four to 176, the lowest since July 2005, according to Baker Hughes Co. data released Friday. Companies have been parking rigs on an almost uninterrupted streak for more than four and a half months.