Following a five-day rally during which WTI prices doubled, oil’s bounce came to an end on Thursday. Futures in New York fell towards US$24 a barrel after swinging between gains and losses during Asian trading. Market optimism had returned since 1st May when OPEC+ began its production reductions equal to 9.7 million barrels per day. In turn, the oil price was heading towards its longest consecutive run of daily gains for almost nine months. Further, there have been signs that demand is recovering – allaying fears that storage space for crude would reach capacity. Nevertheless, the market is still showing caution around what could be a long and uncertain recovery.
In April, the U.K. construction industry contracted at its fastest pace for more than two decades amid the lockdown. IHS Markit said its gauge of activity fell to 8.2 last month, down from 39.3 in March. This figure represents its lowest point since data were first collected in 1997 – and the very first time it has entered single digits.
IHS Markit’s April Purchasing Managers Index (PMI) fell to its weakest reading since the series began in 1992, though sterling was little changed upon the news. The PMI data also highlight the impact upon global supply chains. Lead times lengthened as firms reported logistical issues, border difficulties for overseas goods, delays to shipping and air freight as well as supplier closures. According to Markit, only companies producing medical or food-related goods saw increased orders or output.
Bank of England officials are meeting this week to discuss whether additional measures are necessary to counter the downturn. Any policy decisions are due on Thursday.
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