Oil prices recovered 3% this Monday, their first gain after seven weeks straight of losses, as the Covid-19 new string, Delta, is hitting demand; also, the increasing output by OPEC and the strengthening of the dollar were factors for the loss.
Firstly, this Monday Brent crude climbed $2,15, 3,2% to $67,33 a barrel, after hitting its lowest since May 21, at $64,40; while the U.S. mix, the West Texas Intermediate (WTI) for October delivery rose $2.01, or 3.1%, to $64.15.
Secondly, both benchmarks marked their biggest week of losses in more than nine months last week, with Brent sliding about 8% and WTI about 9%, as we have reported previously.
Thirdly, as Reuters reports, many nations are responding to the dangerous Delta variant by restricting mobility of citizens; also, traveling and with social distancing measures; which slows fuel and oil demand.
Also recommended for you: Electricity demand in Texas to reach high record, as heatwaves continue. Click here to read.
Oil market awaits Federal Reserve’s symposium
Moreover, Kazuhiko Saito, chief analyst at Fujitomi Securities, said, quoted by Reuters. “We expect to see more adjustments this week, but the market sentiment will likely remain bearish, with growing concerns over slower fuel demand worldwide.”
In addition, particularly in China, Delta has spread fast and strong; China, on the other hand, is the world’s largest oil importer and the second biggest oil consumer. After Delta, China imposed stricter restrictions, which affected shipping and global supply chains. The United States and China have also imposed restrictions on flight capacity.
Furthermore, as said above, as demand drags, supply is increasing. U.S. production rose and drilling companies added rigs for the third week in a row, as Baker Hughes reported. However, for his Monday, a slide in the U.S. dollar provided some support, making crude less expensive for holders of other currencies.
Finally, investors are also adjusting their positions before the U.S. Federal Reserve’s annual Jackson Hole symposium in Wyoming on Friday. “While the virus remains a threat to the short-term demand outlook; despite signs of an improving situation in China, this week’s Jackson Hole summit may give the market some ideas about the timing of tapering,” said Ole Hansen; Saxo Bank’s head of commodity strategy.
