Oil steadied as investors assessed the outlook for global demand amid a resurgence in Covid-19 that’s leading to tighter restrictions.
Futures fluctuated near $72 a barrel in New York. The rebound in key energy consumers such as the U.S. and China has helped to underpin increasing fuel consumption and drained bloated stockpiles built up during the pandemic. The fast-spreading delta variant, however, has raised some concerns about the short-term demand outlook.
“The rapid spread of the delta variant of the coronavirus is causing unease amongst market players as demand forecasts might have to be revised downwards due to the re-introduction of lockdowns and mobility restrictions all over the world,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London.
Delta has interrupted a rally in oil that started late last year and has prices heading for only the second monthly drop since October. The flare-up has crimped fuel demand in some regions and coincided with an agreement by OPEC+ to add more supply from August. While headwinds are mounting, there are expectations that the market with continue to tighten throughout 2021.
West Texas Intermediate for September delivery was up 0.2% at $72.06 a barrel on the New York Mercantile Exchange at 9:46 a.m. in London.
Brent for September settlement was little changed at $74.76 on the ICE Futures Europe exchange after gaining 0.5% on Monday.
Covid-19 infections globally have jumped due to a surge across the U.S. and low vaccination levels in Southeast Asian nations. The positive test rate in Indonesia is the worst in Asia, while Thailand and Vietnam have introduced curfews to curb the spread of the virus.