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Oil settles lower in volatile trade on worries about Delta variant

CommoditiesAug 03, 2021 06:02PM ET
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© Reuters. FILE PHOTO: Crude oil storage tanks are seen from above at the Cushing oil hub, in Cushing, Oklahoma, U.S., March 24, 2016. REUTERS/Nick Oxford/File Photo

By Jessica Resnick-Ault

NEW YORK (Reuters) -Oil settled lower on Tuesday, as concern about rising cases of the Delta coronavirus variant outweighed expectations for another weekly draw in U.S. inventories that had boosted prices early.

Brent crude oil futures settled down 48 cents, or 0.66% at $72.41 a barrel. U.S. West Texas Intermediate (WTI) crude settled down 70 cents, or 0.98% at $70.56 a barrel. Prices held lower in post-settlement trade after market sources said preliminary data suggested crude stocks drew in the United States. [API/S]

Concerns over the spread of Delta variant in the United States and China, the top oil consumers, weighed on prices, with both benchmarks falling more than 3% at one point.

In China, the spread of the variant from the coast to inland cities has prompted authorities to impose strict measures to bring the outbreak under control.

"The news flow out of China has been bearish since the weekend," said John Kilduff, a partner at Again Capital Management in New York. "There continues to be angst about the COVID-19 situation, which weighs on the petroleum complex the most."

Earlier, Brent and U.S. crude had risen more than 60 cents. Brent has risen more than 40% this year, helping earnings of oil firms.

"We're trying to price in how big the slowdown is going to be with the Delta variant," said Phil Flynn, senior analyst at Price Futures Group in Chicago.

BP (NYSE:BP), ConocoPhillips (NYSE:COP) , Diamondback (NASDAQ:FANG) Energy Inc and Continental Resources (NYSE:CLR) Inc all reported strong second-quarter earnings this week.

Expectations of a return of Iranian crude to the markets also pressured prices. Iran and six powers have been in talks since April to revive a nuclear pact that could release its oil exports. But officials have said significant gaps remain.

Iran's new president, Ebrahim Raisi, said on Tuesday his government would take steps to lift "tyrannical" sanctions imposed by the United States on its energy and banking sectors.

The sixth round of indirect talks between Tehran and Washington adjourned on June 20, two days after Raisi was elected president. Parties involved in the negotiations have yet to announce when the talks will resume.

A Reuters poll showed U.S. crude and product inventories likely declined last week, with both distillates and gasoline stockpiles predicted to have fallen for a third straight week.

The American Petroleum Institute, a trade group, suggested U.S. crude stocks fell by 879,000 barrels in the week ended July 30, market sources said. The data showed that U.S. distillate inventories, including diesel, fell by 717,000 barrels for the week ended July 30, and U.S. gasoline stockpiles dropped by 5.8 million barrels.[API/S]

Oil settles lower in volatile trade on worries about Delta variant
 

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Comments (6)
Shane KING
K1NGPEASANT Aug 03, 2021 6:28PM ET
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RESERVES JUST GAVE WARNINGWUHAN IN EMERGENCY SHUTDOWN ALL 11 MILLION PEOPLE BEING TESTED27 MAJOR CITIES IN CHINA #SHUTDOWN FOR TESTING REPORTED 2 HOURS AGO& WHO THE HELL IS GOING ANYWHERE HERE IN #USA ? HELL NODELTAVARIANT
John Avenetti
John Avenetti Aug 03, 2021 10:12AM ET
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covid covid covid delta delta delta. Holy 🚬. the lies are on hyperdrive. welcome to the CCP.
Benjamin McIntire
Benjamin McIntire Aug 03, 2021 10:12AM ET
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Things I dont understand are CCP
Al Smith
Al Smith Aug 03, 2021 9:10AM ET
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Translation: China strikes fear into the oil market with their CCP virus so they can buy as much as possible on the cheap.
Scott Reyes
Scott Reyes Aug 03, 2021 9:10AM ET
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yeah proper manipulation
Benjamin McIntire
Benjamin McIntire Aug 03, 2021 9:10AM ET
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Mega mind conclusion
Scott Reyes
Scott Reyes Aug 03, 2021 8:55AM ET
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only thing that matters is inventory and demand f all else
data junkie
data junkie Aug 03, 2021 8:47AM ET
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This is 2 hours ago? It is dropping like a rock now
Eduff San
Eduff San Aug 03, 2021 5:48AM ET
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Delta variant make oil stronger
 
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