Oil prices started the day fluctuating. Expectations that major producers won’t increase supply anytime soon were offset by concerns about slowing global fuel demand due to the rise in the Delta variant of coronavirus infections.
Brent crude fell 2 cents to $69.49 a barrel as of 0410 GMT, after climbing as high as $69.77 at the start of the session.
West Texas Intermediate (WTI) crude rose 2 cents to $67.31 after first reaching $67.66.
On Monday, Brent fell 1.5% and WTI 1.7%.
Concerns about a resurgence in the COVID-19 pandemic changed the mood of the market mid-session. For some, the overall market sentiment is weak. With the northern hemisphere summer season of high fuel demand almost over, the spreading pandemic is delaying the recovery in global fuel demand.
Asia rebounded the previous day’s losses in early trade after the Organization of the Petroleum Exporting Countries and its allies, including Russia, said they believed oil markets did not need more crude than they planned to launch in the coming days.
The effort of the USA to control the increase in oil prices continues. The US last week urged the producer group to increase oil production to combat rising gasoline prices, which they see as a threat to the global economic recovery.
The world’s largest oil importer China’s daily crude oil processing last month hit its lowest level since May 2020, as concerns over weak demand in China, curtailed production by tight quotas at independent plants, high inventories and weakening profits.
China’s factory output and retail sales growth also slowed sharply in July. Factory output and retail sales, fell short of expectations as new COVID-19 outbreaks and flooding disrupted business operations and raised the signs that the economic recovery is losing momentum.
Hedge funds sold oil for the sixth time in eight weeks as rising coronavirus infections in China, Europe and North America dampened hopes for a revival in long-haul aviation.
Meanwhile, the market is ignoring increased production of US shale oil.
US shale oil production is expected to rise to 8.1 million barrels per day (bpd) in September, according to the Energy Information Administration’s monthly drilling efficiency report on Monday.
WTI has support around $65 and traders tend to look for a ground to bargain when the benchmark approaches the level we saw Monday and last week.