Oil was up Tuesday morning in Asia, but Brent oil futures and WTI futures both remaining below the $70 mark. A broader market rout, combined with the recent COVID-19 outbreaks involving the Delta strain, all raised concerns about the short-term fuel demand outlook.
Brent futures rose 3.46% to $28.09 by 12:26 AM ET (4:26 AM GMT) after falling 6.8% to an eight-week low on Monday, the most since March 2021. WTI futures jumped 3.92% to $24.95.
Global COVID-19 outbreaks also continue to cloud the fuel demand outlook, as some countries re-introduce lockdown measures. The number of daily COVID-19 cases in the U.K. surged, even after most COVID-19 restrictions were lifted on Monday, and prompted the U.S. to warn its citizens not to travel to the country. The number of cases in Japan’s Olympic village also continues to rise, ahead of the Tokyo Olympic Games’ opening ceremony on Jul. 23.
The economic recovery from COVID-19 earlier in 2021 saw oil record gains in seven of the past eight months. However, recent outbreaks of the virus and some countries’ reimposition of restrictive measures put a dent in those gains.
The Organization of the Petroleum Exporting Countries and allies (OPEC+)’s resolution of its dispute over output increases earlier in the week removed some uncertainty for investors. With the supply from August 2021 onwards now secured, it is widely expected that the market will tighten and prices rise once again.
However, some investors warned that the increased OPEC+ supply would not be enough to fill an imminent supply shortfall. The latest COVID-19 outbreaks also indicate that the fuel demand outlook will remain uneven for some time.
Investors now await U.S. crude oil supply data from the American Petroleum Institute, due later in the day.