Oil prices rebounded from a seven-day streak of losses and rallied on Monday as investors rushed to bargain and a softer dollar gave support. But the continuing sense of concern over the increasing cases of the coronavirus Delta variant has kept it cautious.
Brent crude futures rose $1.16, or 1.8%, to $66.34 per barrel as of 0430 GMT, after hitting $64.60 at the start of the session, the lowest since May 21.
West Texas Intermediate (WTI) October crude futures rose $1.07, or 1.7%, to $63.21 a barrel, rebounding from $61.74, the lowest since May 21 touched in early Asian trading.
Markets are gearing up for weak worldwide fuel demand due to the rise in the pandemic. Both benchmarks suffered their biggest week of losses in more than nine months last week, with Brent falling about 8% and WTI about 9%.
Oil prices took a breather on Monday after falling sharply last week. However, the market sentiment is likely to continue its downward trend amid growing concerns over slowing worldwide fuel demand.
Many countries are trying to respond pandemi by adding travel restrictions to curb the spread of the rising coronavirus infection rate triggered by the highly contagious Delta variant.
China, the world’s largest importer of crude oil, has imposed new restrictions with its ‘zero tolerance’ coronavirus policy affecting shipping and global supply chains. Along with China, the United States also brought flight capacity restrictions.
Supply is rising steadily as the pandemic suppresses fuel demand. As an indication of this, Baker Hughes said US production rose to 11.4 million barrels per day in the last week, with drilling companies increasing the number of rigs for the third week in a row.
While the Fed was considering reducing the stimulus, thoughts on making a broader assessment of the economic impact of pandemic fluctuations came to the fore.
The depreciation of the US dollar also provided some support to oil prices. A softer dollar encourages investors to opt for oil.
The dollar index traded at 93,333, down slightly from 93,734, the highest in more than nine months, on Friday. When the dollar falls, oil becomes cheaper for buyers as oil prices move in opposition to the US currency.
