Oil Rises as Markets Expect Continued Drop in Inventories

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  • US oil prices reverse after early rebound
  • The brakes against the coronavirus and the slowdown in plant activity weigh heavily

LONDON, Aug. 3 (Reuters) – Oil rose on Tuesday in anticipation of a continued decline in oil stocks in the United States, recouping some losses from the previous session amid lingering concerns over increasing cases of the variant of the Delta coronavirus.

Brent, the international benchmark for oil prices, rose 60 cents, or 0.8%, to $ 73.49 a barrel at 9:05 am GMT.

U.S. West Texas Intermediate (WTI) crude rose 63 cents, or 0.9%, to $ 71.89 a barrel.

Both markets fell more than 3% on Monday.

“Some market participants see Monday’s price pullback as a bit of a stretch, given that we are likely to see another drop in oil stocks this week,” UBS analyst Giovanni Staunovo said.

A preliminary Reuters poll showed U.S. crude and commodity inventories likely declined last week, with distillate and gasoline inventories expected to fall for a third week in a row.

Despite recent fluctuations, oil prices are high and healthy, increasing the profits of major oil companies. BP (BP.L), Diamondback Energy Inc (FANG.O), Continental Resources Inc (CLR.N) and Pioneer Natural Resources Co (PXD.N) posted strong second quarter earnings this week. Read more

Brent prices have risen by over 40% since the start of the year.

However, concerns about the spread of the Delta variant to the United States and China, the major consumers of oil, have put pressure on prices.

In China, the spread of the Delta variant from the coast to cities in the interior prompted authorities to impose strict measures to bring the outbreak under control. Read more

“Delta concerns will likely keep oil markets volatile over the next few weeks, but at the same time, we are also seeing flight activity across Europe and the United States continue to increase, supporting demand for oil. “Staunovo said.

Oil prices also came after the pressure on expectations of Iranian crude returning to the markets.

Iran’s new president, Ebrahim Raisi, said on Tuesday that his government would take action to lift “tyrannical” sanctions imposed by the United States on its energy and banking sectors. Read more

Iran and six powers have been in talks since April to revive a nuclear pact. But Iranian and Western officials said significant gaps remain.

The sixth round of indirect talks between Tehran and Washington was adjourned on June 20, two days after Raisi was elected president. The parties involved in the negotiations have not yet announced when the talks will resume.

Reporting by Bozorgmehr Sharafedin in London, additional reporting by Naveen Thukral in Singapore; Editing by Kenneth Maxwell and Jacqueline Wong

Our Standards: Thomson Reuters Trust Principles.

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