Oil prices were lower in early Asian trade on Monday as the dispute in talks among key producers to raise output in coming months kept supplies tight, offsetting concerns about coronavirus’ impact on the global economy.
Brent crude for September fell 4 cents to $75.51 a barrel by 0032 GMT
U.S. West Texas Intermediate crude for August was at $74.54 a barrel, down 0.03%
The dispute within the Organization of the Petroleum Exporting Countries and allies (OPEC+) over output levels from August is continuing from the previous week. The United Arab Emirates’ rejection of a proposed eight-month extension to the OPEC+ output curb risked a price war not dissimilar to Saudi Arabia and Russia, which took prices into negative territory in April 2020.
“Uncertainty has enveloped the market in the wake of OPEC’s stalemate over future production increases… in the absence of a deal, the current production cuts remain in place, which should see the market tighten further amid strong demand,” ANZ analysts said in a note.
Investors also continued to digest the previous week’s crude oil supply data from the U.S. Energy Information Administration and American Petroleum Institute that showed draws of 6.866 million barrels and 7.983 million barrels, respectively.
Front-month WTI futures posted a sixth weekly gain during the previous week as a result. Baker Hughs data also said that U.S. energy firms added oil and natural gas rigs for a second consecutive week thanks to higher oil prices.
However, the spread of the Delta variant of the COVID-19 virus and low vaccination levels in some countries are threatening the global economic recovery, finance ministers from the Group of 20 (G20) said on Saturday as they met in Venice. Rising numbers of COVID-19 cases led some of these countries to re-implement restrictive measures, in turn casting a shadow over the fuel demand outlook.