Oil futures remained in rebound mode Thursday, taking back ground lost in a Monday rout, as traders shake off concerns about the impact of the spread of the delta variant of the coronavirus on energy demand and a rise in U.S. crude inventories last week.
“It has been a very strange week for crude oil selling off Monday on the good news of the OPEC+ deal and rallying Wednesday despite the bad news of surprise weekly U.S. inventory builds,” Colin Cieszynski, chief market strategist at SIA Wealth Management, told MarketWatch.
He said the deal announced on Sunday by the Organization of the petroleum Exporting Countries and their allies — known as OPEC+ — to gradually increase production levels is “very positive news for the oil market maintaining supply discipline, averting a potential supply war and maintaining a structure to make adjustments as market conditions change.”
The near-term risks, however, have now “shifted to the demand side and the potential impact of new delta wave lockdowns,” said Cieszynski. Over time, “the impact of each round of lockdowns has been smaller, but it remains an ongoing reminder to traders that the road to recovery remains bumpy.”
West Texas Intermediate crude for September delivery
was up 49 cents, or 0.7%, at $70.79 a barrel on the New York Mercantile Exchange, following a climb of 4.6% on Wednesday.
September Brent crude
the global benchmark, edged up by 53 cents, or 0.7%, at $72.76 a barrel on ICE Futures Europe.
On Monday, WTI had plunged by more than 7%, while Brent lost more than 6%.
“Oil is enjoying another day in the green, with WTI firmly back above $70 and the mid-July malaise seemingly behind us,” said Craig Erlam, senior market analyst at Oanda, in a note. “To climb back above $70 so rapidly after Monday’s selloff was impressive and says a lot about how traders view the dips, something that can be applied more broadly to risk assets.”
Oil rose Wednesday, with an unexpected rise in U.S. crude inventories reported by the Energy Information Administration offset by a fall in supplies at Cushing, Oklahoma, the delivery hub for Nymex oil futures.
Natural-gas futures extended their decline after the EIA said supplies of the commodity rose by 49 billion cubic feet for the week ended July 16. IHS Markit had forecast an increase of 51 bcf.
August natural gas
traded at $3.91 per million British thermal units, down 1.1%, after settling Wednesday at the highest since December 2018.