Oil rose on Tuesday, recovering from the previous day’s drop, as expectations of further declines in U.S. crude inventories outweighed fears that spreading COVID-19 variants could derail a global economic recovery.
Brent crude for September climbed 25 cents, or 0.3per cent, to US$75.41 a barrel by 0036 GMT, after losing 0.5per cent on Monday. U.S. West Texas Intermediate crude for August was at US$74.33 a barrel, up 23 cents, or 0.3per cent, having fallen 0.6per cent the previous day.
“Optimism about tight supply and declining U.S. crude stockpiles lent support,” said Toshitaka Tazawa, an analyst at commodities broker Fujitomi Co, adding that bullish global equities also helped boost risk appetite among investors.
“Still, growing concerns over a spike in COVID-19 infection cases worldwide and uncertainty over production plans by OPEC+ will likely limit gains,” he added.
U.S. crude inventories were expected to fall for an eighth consecutive week, while gasoline stocks also declined, a preliminary Reuters poll showed on Monday.
Crude stockpiles have declined steadily for several weeks, with U.S. inventories falling to the lowest since February 2020 in the week to July 2.
Underpinning market sentiment, a gauge of global stocks closed at a record on Monday as investors looked for signs on whether the Delta variant of the COVID-19 coronavirus could hamper economic growth.
Still, reports from around the globe of surging infections kept some investors cautious.
The World Health Organization warned the Delta variant was becoming dominant and many countries had yet to receive enough doses of vaccine to secure their health workers.
Meanwhile, OPEC+ is yet to make progress closing divisions between Saudi Arabia and the United Arab Emirates that last week prevented a deal to raise oil output, making another policy meeting this week less likely, OPEC+ sources said.