Futures in London climbed above $70 on Tuesday, and were little changed near $71 on Wednesday. Top crude importer China has brought its latest virus outbreak under control, though Covid-19 continues to make its presence felt in other big oil consumers, with Japan expected to announce an expansion of its state of emergency.
Oil has had a volatile August so far. The stellar year-to-date rally cooled in the first half of the month as concerns grew that the virus’s delta variant would hit consumption, while the Federal Reserve flagged plans to taper stimulus measures. Since then prices have recovered, with banks from Goldman Sachs Group Inc. to UBS Group AG underlining bullish calls on the market.
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“Now that Brent has reclaimed the $70 handle, the question is whether or not it can continue to go higher,” said Stephen Brennock, an analyst at brokerage PVM Oil Associates. “The blistering rally seen so far this week is unlikely to be maintained,” as Covid-19 outbreaks continue.
- West Texas Intermediate lost 0.3% to $67.35 a barrel at 8:56 a.m. in London
- Brent for October settlement slipped 10 cents to $70.95.
Other key news:
- Petroleos Mexicanos plans to resume full crude production by Monday after an offshore platform accident that cut the company’s output by a quarter. About 71,000 barrels a day has already restarted.
- The structure of Brent’s futures curve saw strong gains Tuesday. The nearest Brent contract was in a bullish backwardation of 73 cents Wednesday, compared with 40 cents earlier in the week — a sign of market strength.
- U.S. crude, gasoline and distillate inventories all fell last week, the American Petroleum Institute reported Tuesday before government data later. The decline in gasoline and distillate stockpiles was marginal however, at less than 1 million barrels.