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Crude Oil Higher; Covid Fears Limit Gains

CommoditiesJul 22, 2021 03:09PM ET
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© Reuters.

(Updates to market settlement)

By Peter Nurse   

Investing.com -- Crude oil prices pushed higher Thursday, trading back above $70 a barrel and helped by a broader market rally which has recently outweighed concerns about the impact on energy demand from the rise in global Covid cases.

New York-traded West Texas Intermediate, the benchmark for U.S. crude,  settled up $1.61, or  2.3%, at $71.91 a barrel.

London-traded Brent, the global benchmark for oil, finished Thursday's session up $1.56, or 2.2%, at $73.79.

The crude market has been very volatile this week, plunging on Monday on worries over rising coronavirus cases and an agreement between top producers to add supply, before rebounding over the last two days. 

U.S. crude oil supply data from the EIA released on Wednesday showed a build of just over 2 million barrels last week to July 16, ending a run of eight weeks of declines. Normally this would be seen as bearish for the market, but the EIA data also showed a 121,00-barrel draw in gasoline inventories, an indication that demand remains high amid the summer driving season.

Additionally, “we believe that the latest agreement between OPEC+ to increase output and extend the deal further into 2022 is supportive, given that it reduces the risk of the broader deal falling apart, and so minimizes the likelihood of a price war,” said analysts at ING, in a note.

That said, the surge in Covid-19 cases will continue to hit sentiment in the market, particularly as the delta variant, which was first noticed in India, has now made its way to the United States. It is now the cause of more than 80% of new U.S. Covid-19 cases, according to top U.S. infectious disease expert Anthony Fauci on Tuesday.

The Americas are facing a pandemic of the unvaccinated, the Pan American Health Organization said on Wednesday, as it warned that countries with low inoculation rates are seeing massive increases in cases.

On top of this, European Central Bank President Christine Lagarde warned earlier Thursday that the fresh wave of the pandemic could pose a risk to the Eurozone’s economic recovery. Also Bloomberg reported that China supplied oil from state-run inventories to the country’s largest refiners earlier this month in a bid to stifle the price rally.

Crude Oil Higher; Covid Fears Limit Gains
 

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Comments (3)
Jim Morrison
Jim Morrison Jul 22, 2021 6:24PM ET
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yawn...can you post another article about covid please.
Barani Krishnan
Barani Krishnan Jul 22, 2021 6:24PM ET
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Yes should we wait for another 10,000 cases daily? Would that be convenient for your long oil position then?
Mehdi Oummih
Mehdi Oummih Jul 22, 2021 3:59PM ET
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Crude oil WTI prices up 2% and yet all oil company stocks are down for the day? How does that happen?
Iwan kadarusman
Iwan kadarusman Jul 22, 2021 3:59PM ET
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yawn ... the market reject the real data
Mehdi Oummih
Mehdi Oummih Jul 22, 2021 3:59PM ET
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Iwan kadarusman  it seems like the market has decided that short action will rule the day no matter what.
Manish Manish
Manish Manish Jul 22, 2021 2:45PM ET
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what did u said? Covid? It's a big political fraud nothing else.
Barani Krishnan
Barani Krishnan Jul 22, 2021 2:45PM ET
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Yes, Covid's Delta variant, Manish We could have another spike because of ignoring people like you. Simply because it's inconvenient for your long positions, doesn't mean people have to stop talking about it.
Barani Krishnan
Barani Krishnan Jul 22, 2021 2:45PM ET
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Typo: "ignorant" people like you.
 
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