Oil prices climbed on Tuesday, reversing some of the previous day’s losses, as tight supply and expectations of a further draw in U.S. crude inventories provided support, although fears over the spreading COVID-19 variant capped gains.
“Optimism about tight supply and declining U.S. crude stockpiles lent support. Still, growing concerns over a spike in COVID-19 infection cases worldwide and uncertainty over production plans by OPEC+ will likely limit gains.” Toshitaka Tazawa, an analyst at commodities broker Fujitomi Co.
U.S. crude inventories were expected to fall for an eighth consecutive week, while gasoline stocks also declined. Crude stockpiles have declined steadily for several weeks, with U.S. inventories falling to the lowest since February 2020 in the week to July 2.
“The predicted increase is still relatively small .The continued restraint on drilling by U.S. shale will underpin oil prices going forward. Bullish global equities amid hopes for a robust recovery in economy also boosted risk appetite in oil markets,” Satoru Yoshida, a commodity analyst with Rakuten Securities,
The World Health Organization warned the Delta variant was becoming dominant and many countries had yet to receive enough doses of vaccine to secure their health workers.
Meanwhile, OPEC+ is yet to make progress closing divisions between Saudi Arabia and the United Arab Emirates that last week prevented a deal to raise oil output, making another policy meeting this week less likely, OPEC+ sources said.
Russian President Vladimir Putin and his U.S. counterpart Joe Biden did not discuss OPEC+ or global oil prices during an hour-long phone call on Friday, the Kremlin said on Monday.