Oil rebounds as market seizes on discounted prices

  • Bottom-picking after 7% slump on Monday amid COVID-19 concerns
  • U.S. crude inventories expected to fall for 9th straight week
  • OPEC+ deal to boost oil supply adds pressure
  • Coming Up: API weekly oil inventory data at 4:30 pm ET/2030 GMT

NEW YORK, July 20 (Reuters) – Crude oil futures rebounded on Tuesday as market participants vied to take advantage of oil’s two-month low touched in the previous session.

Monday’s selloff, spurred by demand destruction fears amid rising COVID-19 cases, pushed oil about 7% lower and hit other riskier assets. The oil market was also lower on news that the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, had reached a deal to boost supply in coming months. read more

“There are bottom pickers trying to get into this dip,” said Bob Yawger, director of energy futures at Mizuho in New York.

Brent crude settled up 73 cents, or 1.1%, to $69.35 a barrel after sliding 6.8% on Monday. The global benchmark has fallen from its peak at more than $77 hit in early July – its highest since late 2018.

U.S. crude ended up $1, or 1.5%, to $67.42 in its final day of trading, after hitting a low of $65.21 on Tuesday. The contract fell 7.5% on Monday.

Expiration adds volatility to the market, Yawger said. The next front month, September , rose 94 cents, or 1.4%, to $67.29.

Still, the market was skeptical that the price increase would last.

“It is hard to see prices staging a comeback unless virus jitters are brought back under control,” said Stephen Brennock of oil broker PVM. “The market is clearly unsettled about the demand outlook.”

The Delta coronavirus variant has becomethe dominant strain worldwide, U.S. officials said on Friday. read more

The variant is unlikely to jeopardise the recovery of global growth, though it could cause “regional hiccups,” said Julius Baer analyst Carsten Menke.

Crude inventories in the United States are expected to show a ninth straight week of declines this week. Industry data was due at 4:30 p.m. EDT (2030 GMT), followed by government figures on Wednesday.

OPEC, meanwhile, expects global oil demand to grow by 6.6% in 2021.

Additional reporting by Aaron Sheldrick and Alex Lawler
Editing by David Goodman and Mark Heinrich

Our Standards: The Thomson Reuters Trust Principles.

Read More: Oil rebounds as market seizes on discounted prices

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