Speculation currently rises regarding an incoming second wave of the COVID-19 virus in China. As China is the world’s largest crude oil importer, if this second wave occurs, the crude oil market is bound to suffer. Beijing recently announced that it would be shutting down schools due to the risk of a brand-new wave of infections (Waller, 2020). This risk of a second wave of infection will setback the current recovery of the crude oil market, as demand for crude oil will decrease due to fears of increased worldwide transmission of the virus. Gas prices recently started normalizing within the past several weeks, seeing prices of 94 cents per litre within the GTA. China’s possible second outbreak may see gas prices return to levels seen during the initial stages of the virus outbreak. 


Currently, many technical indicators of the crude oil market’s health have been suggesting that the current rally being made by the market is unlikely to continue for much longer. Brent crude’s 14-day Relative Strength Index (RSI) is nearing 70 again, which indicates that crude oil is currently being overbought and could see a retreat in demand (Waller, 2020).

Amidst predictions of the crude oil market experiencing a decline in the coming future, efforts have been made in an attempt to stabilize the market. It is critical that the crude oil market is supported during the pandemic, as it is a large part of the world’s economy. The market had previously been buoyed by a report that the Trump administration plans to prepare a nearly $1  trillion USD infrastructure proposal in order to help revive the market (Waller, 2020).  

Physical crude oil markets have continued to strengthen amidst these speculations, with Houston and New York diesel climbing within the past week. Physical West Texas Intermediate (WTI) was trading at $1.20 a barrel premium over futures, the greatest differential within the past week (Waller, 2020). Global oil demand is expected to rebound next year, though it may take a couple of years to fully return to pre-crisis levels (Waller, 2020).


The state of the crude oil market will subsequently have many impacts on a global scale. Struggle within the market may see us Canadians as well as other nations experience record lows in gas prices once again. Assuming the second wave does not spread as rapidly and does not hinder many countries’ reopening plans, these low prices may provide some stimulus to the economy as many businesses rely on the resource for their daily operations. If the crude oil industry does, in fact, take a major hit, the falling oil prices will be indicative that now could be an ideal time to purchase oil, however, it is still likely for prices to fall even lower. Continued recovery within the market may boost the spirits of investors who purchased crude oil earlier in March and April when oil prices were at a historical low. It will be worthwhile to pay close attention to the crude oil market over the next few weeks in order to make more informed investment decisions and to stay updated on the relative health of the economy. 


Waller, H. (2020, June 15). Second Wave Virus Concerns Loom Large Over Crude Oil Market. Retrieved June 16, 2020, from