Oil futures moved up on Tuesday, following a three-session losing streak, but investors continued to fret over the outlook for demand due to the ongoing spread of the delta variant of the coronavirus that causes COVID-19.
“The fundamental outlook for oil is mixed as in the immediate term,” analysts at Sevens Report Research wrote in Tuesday’s newsletter. Delta fears are weighing on demand expectations but in the medium term, a “global supply deficit is expected to last through year-end.”
Looking further down the road, sharp increases in 2022 production by the Organization of the Petroleum Exporting Countries and their allies, together known as OPEC+, are “expected to swing the market back into a surplus,” the analysts wrote. “As such, more sideways trade between support at $66 and resistance at $75” in U.S. benchmark oil prices is expected.
“Risks for a downside break do seem to be building with more uncertainty about the economic recovery emerging,” they added.
West Texas Intermediate crude for September delivery
the global benchmark, was up 44 cents, or 0.6%, at $69.95 a barrel on ICE Futures Europe.
New Zealand took drastic action Tuesday, with the government putting the entire nation into a strict lockdown for at least three days after finding a single case of coronavirus infection in the community. The continued spread of the virus is being blamed for renewed congestion at ports in China, adding to worries about further lockdowns and the potential for a slowdown in economic activity around the world.
The Biden administration was expected to announce that most vaccinated Americans should get a COVID-19 booster shot eight months after being fully vaccinated, the New York Times reported Monday night.
Crude fell Monday but ended the day off session lows, finding support late in the session after Reuters reported that OPEC+ doesn’t believe the market needs more crude than they already plan to produce in coming months. The Biden administration last week urged OPEC+ to produce more crude.
Oil traders await weekly data on U.S. petroleum supplies from the Energy Information Administration Wednesday morning.
On average, analysts expect the government report to show a 3.1 million-barrel decline in domestic crude inventories for the week ended Aug. 13, according to a survey conducted by S&P Global Platts. They also forecast a fall of 2.3 million barrels for gasoline stockpiles and an increase of 700,000 barrels for distillate supplies.
September natural gas
traded at $3.84 per million British thermal units, down 2.6%, after tacking on 2.2% on Monday.