Oil prices were trading slightly down early on Monday after having fallen 1 percent in Asia trade, as the bullish factor of tight market countered the bearish factor of the Delta variant spreading in many countries.
Prices had fallen earlier on Monday by 1 percent as cases of the Delta variant of COVID-19 continued to rise in many countries, including in the United States.
“Crude futures were softening early Monday in Asia as profit-taking returned on the back of a modest climb at Friday’s settle and the first week-on-week gain in prices after three consecutive weekly losses,” Vanda Insights said in a daily note early on Monday.
“With daily new Covid cases in the US continuing to rise, oil demand uncertainty was the main driver of market sentiment,” Vanda Insights noted.
A strong U.S. dollar ahead of Fed’s policy meeting was also weighing on the oil market early on Monday as a rising greenback makes holding crude more expensive for holders of currencies other than the U.S. dollar.
“With the OPEC+ drama behind us, volatility in the market has eased, which leaves the market with a couple of key known uncertainties for now,” ING strategists Warren Patterson and Wenyu Yao said early on Monday.
The key uncertainties, ING says, are the Delta variant spread and potential restrictions over it, plus the unknown with Iranian oil supply as the next round in the nuclear talks are due to start in early August after incoming Iranian President Ebrahim Raisi will be sworn in.
At the start of this week, the market is weighing the currently tight supply against fears of slowing demand growth if the Delta variant impacts mobility and travel.
“Last week’s huge slide and then equally sharp recovery took prices back to key retracement levels – near 74/bbl in Brent and 72-72.50 in WTI as the key focus remains the outlook for the ongoing global demand recovery amidst concerns on the impact of the Covid delta variant,” Saxo Bank said on Monday.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
- Top Oilfield Service Providers See Multi-Year Recovery Ahead
- Can Iran Avoid A Major National Uprising?
- U.S. Shale Sees Light At The End Of The Tunnel