Oil prices rose on Tuesday, offsetting some of the losses of the previous day as the U.S. Tight supply and expectations for a more balanced supply of crude goods provided support, however, fears about the spreading COVID-19 variant paid off.
Brent crude for September was up 19 cents, or 0.3%, at 0.521 to $ 75.35 a barrel after losing 0.5% on Monday. The U.S. for August West Texas Intermediate crude was at $ 74.34 a barrel, up 24 cents or 0.3%, down 0.6% from the previous day.
“Tight supply and optimism about declining U.S. crude reserves gave support,” said Toshitaka Tsawa, an analyst at commodity broker Fujidomi Co.
“However, concerns about an increase in cases of COVID-19 infection worldwide and uncertainty about OPEC +’s production plans will reduce gains,” he said.
U.S. Raw cargo was expected to fall for the eighth week in a row, while petrol stocks fell, an early Reuters poll showed on Monday.
Crude reserves have been steadily declining for several weeks, with U.S. Inventories are very low in the week from February 2020 to July 2.
China’s crude imports rose slightly in May as refiners cut cheap oil to supply the market with recovery from the coronavirus.
Investors have downgraded the Energy Information Administration (EIA)’s monthly drilling production report, which said crude production from the seven major shale systems is expected to rise 42,000 ppm in August to 7.907 million ppm, up from 28,000 ppm in July.
“The forecast increase is still relatively small,” said Satoru Yoshida, a commodity analyst with Raguden Securities.
“The fall in global stocks amid optimism for a strong recovery in the economy also increased risk appetite in oil markets,” Yoshida said.
Asian stocks rose in early trade on Tuesday after Wall Street hit a record overnight, with investors expecting a second-quarter earnings season and a set of economic data.
However, infections from around the world have some investors wary.
The World Health Organization warns that the delta variant is dominating and that many countries are not getting enough vaccines to protect their health workers.
Meanwhile, OPEC + has not yet made any progress in closing the rift between Saudi Arabia and the United Arab Emirates, blocking an agreement to boost oil production last week, and another policy meeting this week, OPEC + sources said.
The Kremlin said on Monday that Russian President Vladimir Putin and his US envoy Joe Biden did not discuss OPEC + or global oil prices during an hour-long phone call on Friday.