Oil climbs up amid Delta spread
Oil continued its gains as investors wager that the global demand recovery will remain unaffected in spite of the spike in COVID-19 cases that led to more restrictions on mobility in several regions.
Futures in New York went up 0.3% to trade near $72 a barrel after experiencing a drop on Monday. The recovery of major energy consumers such as the US and China has helped strengthen the increasing fuel consumption and clear out excess stockpiles built up during the pandemic.
However, the highly infectious Delta variant of the coronavirus has raised concerns about the short-term demand outlook.
The novel COVID-19 strain has also interrupted oil’s rally that started late in the previous year and had prices heading for only the second monthly drop since October. The surge in coronavirus cases due to the Delta variant has crippled fuel demand in some regions and happened in simultaneity with the Organization of Petroleum Exporting Countries and allies’ (OPEC+) agreement to increase supply from August. Expectations remain that the market will continue to tighten throughout the year, amid mounting headwinds.
In other oil news, Brent’s prompt timespread was 85 cents a barrel in backwardation, compared to the previous week’s 58 cents.