On Monday, crude oil prices continue losing after reaching the lowest level since October last week as the delta variant of coronavirus clouds the short-term outlook.
Futures in New York plunged close to USD67/barrel after slumping by almost 8% last week.
Weighing down prices is the stronger US Dollar who weakened the appeal of raw materials such as oil and gold priced in the currency.
Other than that, the oil supply hike by 400,000 bpd starting from August by the Organization of the Petroleum Exporting Countries and its allies (OPEC+) also dragged down prices.
The resurgence of coronavirus cases related to the new Delta variant also impacts the structure of the oil market. The prompt time spread for Brent has narrowed to 35 cents a barrel in backwardation, compared with 69 cents a week earlier.
Looking forward, the outlook is seen to be cloudy just for the short term due to the Delta variant. However, the long-term outlook is not as muddy as analysts estimated that the market will be able to absorb the additional barrels as demand accelerates.
Daniel Hynes, senior commodities strategist at Australia and New Zealand Banking Group Ltd. commented, “Indicators suggest demand is still robust in major markets such as the US and Europe, and I cannot see this sell-off continuing for too much longer if that remains the case.”
On Friday, the US jobs data was robust and has raised expectations that the Federal Reserve may start pulling back its massive stimulus.
