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Copper Tip Energy Services
Hazloc Heaters
Copper Tip Energy

Oil Slips Following Two-Day Gain With Demand Outlook in Focus

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These translations are done via Google Translate
(Bloomberg) Oil dipped after a two-day gain as investors assessed the demand outlook amid a resurgence of Covid-19 in many regions.

Futures in New York fell below $74 a barrel after rising more than 2% on Friday. While the rollout of vaccines and the revival of major economies have helped boost fuel consumption, the spread of the highly infectious delta variant and uncertainty over supply from the OPEC+ alliance are clouding the outlook.

There are also signs that China’s recovery is slowing. Its economy was always expected to descend from the heights hit during its initial rebound, but economists say the softening has come sooner than expected.

Oil volatility is near the highest level since April

Oil’s upward momentum was interrupted last week after an OPEC+ meeting on output levels was abandoned amid deadlock between producers. Crude capped its first weekly loss since May — despite an end-of-week rally — on concern that the impasse could lead to another price war. The alliance had been widely expected to restore more of the production it idled during the pandemic.

“There is some weaker Chinese data, but also the rise of the delta variant in Europe is causing some doubts on the demand recovery,” said Hans van Cleef, senior energy economist at ABN Amro. Additionally, there’s the question of whether OPEC+ will find a solution and increase production, he said.

Sky Eye Measurement
Sky Eye Measurement
  • West Texas Intermediate for August delivery lost 1.6% to $73.40 a barrel on the New York Mercantile Exchange at 12:24 p.m. London time, after climbing more than 3% over the past two sessions.
    • Futures fell 0.8% last week.
  • Brent for September settlement slid 1.4% to $74.50 on the ICE Futures Europe exchange, after adding 1.9% on Friday.

The International Energy Agency will provide investors with a snapshot of the market on Tuesday with the release of its monthly report, while OPEC will release its own monthly report on Thursday.

The market’s bullish structure has eased slightly amid the OPEC+ uncertainty. The prompt timespread for Brent is 77 cents a barrel in backwardation — where near-dated contracts are more expensive than later-dated ones — compared with 99 cents a week ago.

The coronavirus remains a constant source of concern. The U.S. reported the most cases since mid-May as delta takes hold in less-vaccinated areas. French officials warned of a new wave, while U.K. Prime Minister Boris Johnson will instruct people to stay vigilant as he prepares to lift most remaining restrictions in England. In Asia, Indonesia is in the throes of a major outbreak and case numbers are also high in Thailand and Malaysia.

Other market news:
  • Saudi Aramco offered full contractual crude oil supply to at least six buyers in Asia for August sales, according to refinery officials who were notified by the producer.
  • Evidence of U.S. oil explorers holding the line on spending is no more apparent than in the weekly rig count for America’s busiest shale patch, the Permian Basin.
  • Limetree Bay Energy is preparing for a bankruptcy filing by its oil refinery in the U.S. Virgin Islands after the company indefinitely extended a shutdown of the plant.

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