Investors predict further oil fall
Oil prices rose on Tuesday, reversing some of the previous day’s losses. Tight supply and expectations of further drawdowns in US crude inventories provided support for the trend. Investors though concerns about the spread of the COVID-19 variant, limited gains.
Brent crude for September rose 19 cents, or 0.3 %, to $75.35 per barrel by 0421 GMT. This comes after falling 0.5 % the previous day. The August West Texas Intermediate crude price in the United States was $74.34 per barrel, up 24 cents, or 0.3 percent, from the previous day’s cost, which had fallen 0.6 percent. According to a preliminary Reuters poll, crude inventories in the United States expect to fall for the eighth consecutive week. Gasoline stocks are also expected to lose.
Crude stockpiles have been steadily declining for several weeks. US inventories are reaching their lowest level since February 2020 in the week ending July 2.
Optimism about tight supply and declining US crude stockpiles aided the market, said Toshitaka Tazawa. Mr. Tazawa is an analyst at commodities broker Fujitomi Co.
However, growing concerns about an increase in COVID-19 infection cases worldwide, as well as uncertainty about OPEC+ production plans, will likely limit gains,” he added.
Monitor OPEC+’s progress
China’s crude imports increased slightly from May but were significantly lower than a year ago when refiners snatched up cheap oil to supply a market recovering from the coronavirus.
Investors are keeping a close eye on OPEC+’s progress toward resolving a price dispute between Saudi Arabia and the United Arab Emirates. The conflict prevented the cartel from reaching an agreement to increase oil output beginning in August 2020. Another policy meeting is unlikely to take place within the next week, reportedly.
Investors are now waiting for American Petroleum Institute crude oil supply data, which is expected later in the day. Due to several weeks of draws, crude inventories in the United States fell to their lowest level since February 2020 in the week ending July 2. With US equities closing at record highs the previous session, a rally in global stocks boosted investor confidence.
China’s crude imports increased slightly from May, but they were significantly lower than a year ago. This is when refiners snatched up cheap oil to supply a market recovering from the coronavirus.
Asian stocks rose in early trade on Tuesday, following Wall Street’s overnight record highs. Investors awaited the second-quarter earnings season and a slew of economic data.
Meanwhile, OPEC+ has yet to bridge the gap between Saudi Arabia and the United Arab Emirates that prevented a deal to increase oil output last week. New restrictions to contain COVID-19 outbreaks involving the Delta variant of the virus in countries such as Australia and South Korea may also dim the outlook for fuel demand as the economic recovery slows.
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