- Chinese oil import growth expected to drop sharply
- Oil market deficit expected to last but virus darkens demand
NEW YORK, July 26 (Reuters) – Oil prices stabilized on Monday after a choppy session as the spread of the COVID-19 Delta variant fueled fears over fuel demand, but losses were limited by forecast that crude oil supply will be tight for the rest of the year.
Brent crude futures rose 40 cents, or 0.5%, to close the session at $ 74.50 a barrel, while US West Texas Intermediate crude fell 16 cents, or 0.2 %, to settle at $ 71.91.
At the start of the session, both benchmarks fell more than $ 1 a barrel.
“Risk appetite has clearly improved massively over the past week and just like other risky assets, oil is taking a hiatus before a few intense days,” said Craig Erlam, senior market analyst at OANDA.
“The upturn in the second quarter made the impulses beat at the prospect of what is to come. The next wave of COVID is a downside risk for it, but not to the extent that previous outbreaks have. Optimism is always strong and for good reason. “
Coronavirus cases continued to rise over the weekend, with some countries reporting record daily increases and extending lockdown measures. China, the world’s largest importer of crude, has also seen an increase in COVID-19 cases.
Some fear that China’s oil imports may grow this year at the slowest pace in two decades despite an expected hike in refining rates in the second half of the year, amid Beijing’s crackdown on the abuse of quotas. import combined with the impact of high crude prices. Read more
“The Delta variant continues to spread and China has started to restrict teapots (independent refiners), so their import growth would not be that big,” Avtar Sandu, senior commodity manager at Phillips Futures, said at Singapore.
Reports from India also point to muted demand for oil, Commerzbank analysts said in a note.
“Oil imports in June fell to their lowest level in nine months, while crude oil processing was only slightly above the low level in May, which was influenced by pandemic restrictions,” they said. declared.
Still, both crude benchmarks last week recovered from a 7% drop earlier in the week and marked their first weekly gains in two to three weeks, boosted by strong U.S. demand and expectations for tight supplies.
Inventories at Cushing, Oklahoma, the delivery point for U.S. crude futures, fell about 2.6 million barrels last week, traders said, citing data from Wood Mackenzie.
Global oil markets are expected to remain in deficit despite the decision of the Organization of the Petroleum Exporting Countries and its allies, known collectively as OPEC +, to increase production until the end of the year.
“There is apparently a battle within the energy complex between the current supply gap designed by OPEC + and the threat of the COVID-19 Delta variant in areas with low vaccination rates,” the analyst said. by StoneX Kevin Solomon.
“Slow vaccinations will continue to limit some increase in oil demand in these regions, and there will be intermittent periods of recovery in the coming months.” “
Additional reporting by Noah Browning and Florence Tan Editing by Marguerita Choy, David Goodman and David Gregorio
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