Mon, 02 Aug 2021

Oil prices rebound after massive losses

Xinhua
21 Jul 2021, 06:44 GMT+10

NEW YORK, July 20 (Xinhua) -- Oil prices climbed on Tuesday, recouping some of the significant losses they had suffered in the prior session.

The West Texas Intermediate for August delivery added 1 U.S. dollar, or 1.5 percent, to settle at 67.42 dollars a barrel on the New York Mercantile Exchange. Brent crude for September delivery increased 73 cents, or 1.1 percent, to close at 69.32 dollars a barrel on the London ICE Futures Exchange.

The above moves followed a major setback on the oil market which saw the U.S. crude benchmark and Brent tumble 7.5 percent and 6.8 percent, respectively, on Monday.

"The agreement reached by the OPEC countries and their allies (OPEC+) to further increase production from August and set a higher baseline for future production adjustments contributed to yesterday's massive slide in oil prices," Eugen Weinberg, energy analyst at Commerzbank Research, said in a note on Tuesday.

Yet, he said "the pronounced price slide was due chiefly to external factors such as the rise in risk aversion, a sell-off on the stock markets and a significantly stronger U.S. dollar."

"The spread of the more contagious Delta variant of coronavirus, which is being blamed for the higher risk perception, is all the more dangerous for the oil price because the potential for renewed mobility restrictions would jeopardise the most important aspect underlying the upswing in oil prices in recent months, namely the sharp rise in demand," Weinberg noted.

Traders also awaited official data on U.S. crude stockpiles as the U.S. Energy Information Administration (EIA) is set to release its weekly petroleum status report on Wednesday.

Analysts surveyed by S&P Global Platts expect the EIA publications to show a fall of 6.7 million barrels in U.S. crude supplies for the week ending July 16.

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