Oil steadies as resurgent virus casts shadow over demand

Bloomberg

Oil steadied as the resurgent pandemic posed a fresh threat to fuel demand even as global crude markets continued to tighten.
Futures fluctuated near $72 a barrel in New York. The rebound in key energy consumers such as the US and China has helped to underpin increasing fuel consumption and drained bloated stockpiles built up during the pandemic. The fast-spreading delta variant, however, has raised some concerns about the short-term demand outlook.
“The rapid spread of the delta variant of the coronavirus is causing unease amongst market players as demand forecasts might have to be revised downwards due to the re-introduction of lockdowns and mobility restrictions all over the world,” said Tamas Varga, an analyst at PVM Oil Associates Ltd in London.
Delta has interrupted a rally in oil that started late last year and has prices heading for only the second monthly drop since
October.
The flare-up has crimped fuel demand in some regions and coincided with an agreement by Opec+ to add more supply from August. While headwinds are mounting, there are expectations that the market with continue to tighten throughout 2021.
West Texas Intermediate for September delivery was little changed at $71.86 a barrel on the New York Mercantile Exchange at 8:49 am local time.
Brent for September settlement was 0.2% higher at $74.66 on the ICE Futures Europe exchange after gaining 0.5%.
Covid-19 infections globally have jumped due to a surge across the US and low vaccination levels in Southeast Asian nations.
Ethane, a key component in plastic production, is trading at a nearly two-and-a-half-year high in the US, with demand surging as global economies recover from last year’s slump.