On Monday, oil prices were steady after gaining a modest weekly gain as the coronavirus’ delta variant clouds the robust outlook of demand due to vaccination.
In New York, futures traded close to USD72/barrel after gaining 0.4% last week. Last week’s rise was the first in three weeks. The prompt time spread for Brent was 66 cents a barrel in backwardation, compares with 88 cents at the beginning of July.
Demand for fuels is seen to be increasing as vaccination programs are rolled out. However, the rise of the delta variant of coronavirus, simultaneously with the salvaged OPEC+ oil output agreement to add more output from August, has whipped up stiff headwinds for oil and interrupting a price rally.
Other than that, the lagging aviation sector, sans North America’s, has not successfully diminish the massive glut in jet fuel inventories even when the recovery in key energy consumers such as the U.S. and China has helped to drain bloated crude and fuel stockpiles built up during the pandemic.
“The delta variant continues to hang over the demand recovery,” said Vandana Hari, founder of energy consultant Vanda Insights in Singapore. “It may take some time for the oil bulls to recover their confidence.”
