WTI crude is opening a bit softer but still trading near its current centre of gravity around $40.00 per barrel.

However, oil remains at a sensitive point ahead of the August return of some OPEC+ production and signs that US shut-ins production is also rebounding.

All the while, Covid-19 continues to remain the most significant demand constraint on the planet as the tracking data breached 18 million worldwide as we enter a new phase of the virus where case and death counts rise exponentially.

Indeed, it speaks fear fast and loud, just how quickly this virus is spreading around the world.

Adding to matters is that the US consumer market is entering the last few weeks of peak driving season and with mobility tracking data flatlining so unless there is a significant drop in the Covid-19 case count curve that is sufficient enough to reduce consumer fear of the virus and shift mobility data higher, demand might not get much better from here on in.

Tropical Storm Isaias scraped by the Florida coast. Still, due to its north to northwest trajectory, it could pose a threat to the densely populated US eastern seaboard, which could provide a higher degree of demand devastation to the current view.

The balance between positive longer-term sentiment and near-term negatives (increasing coronavirus infections, rising OPEC+ and US onshore production) has kept oil in a relatively tight range in recent weeks and on an upward trend for three consecutive months.

Still, I think positive sentiment could be tested in August as growing near-term pressure on the supply side becomes harder to ignore.

Oil bulls are hoping for a super hot August in the Middle East so that some of the builds in OPEC production can be sopped up to power A/C facilities.

Oil markets analysis and insights from Stephen Innes, Chief Global Market Strategist at AxiCorp