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Oil futures ended a choppy session with small gains Tuesday, after flipping between positive and negative territory, as investors monitored a pickup in the spread of the delta variant of the virus that causes COVID-19 and awaited an OPEC+ decision on whether to further lift curbs on crude production.
West Texas Intermediate crude for August delivery
CL00,
CLQ21,
rose 7 cents, or less than 0.1%, to finish at $72.98 a barrel on the New York Mercantile Exchange. September Brent crude
BRN00,
BRNU21,
the global benchmark, rose 14 cents, or 0.2%, to end at $74.28 a barrel on ICE Futures Europe. August Brent
BRNQ21,
rose 8 cents, or 0.1%, to $74.76 a barrel.
“The delta variant of COVID-19 could become a real issue but it may still be too early to tell. Experts are mixed on this issue and whether or not it will lead to another round of economic shutdowns,” said Phil Flynn, analyst at Price Futures Group, in a note. “So for now while the risk is there and should be watched, it is too early to decide whether or not this will have any meaningful impact on oil demand growth.”
The World Health Organization is recommending that fully vaccinated people continue to wear face masks in public, breaking with the guidance offered by the U.S. Centers for Disease Control and Prevention. The WHO is concerned about the rapid spread of the highly infectious delta variant of the virus, with cases rising around the world, leading to renewed travel restrictions.
Read: Spain will now require U.K. travelers to show proof of vaccination or negative COVID test
Meanwhile, the decision by OPEC+ — made up of members of the Organization of the Petroleum Exporting Countries and its allies, including Russia — is expected Thursday, and remains the key event of the week. Members expected to further ease output curbs beginning in August by around 500,000 barrels a day.
See: More ‘wiggle room’ for OPEC+ allows oil producers to mull an output hike without pressuring prices
“Improved economic activity and more traveling should easily absorb the slight change in the OPEC supply, if, however, the post-Covid recovery momentum doesn’t get hurt by another contagion wave,” said Ipek Ozkardeskaya, senior analyst at Swissquote, in a note. “In the short run, we could see a further setback towards the $72-$70 area” for WTI.
Ahead of Thursday’s virtual gathering of oil ministers, a panel of experts, known as the OPEC+ Joint Technical Committee met Tuesday. The expert consultations produced no unanimous recommendations, Reuters reported.
Traders will also be watching private industry data on weekly U.S. crude inventories due Tuesday afternoon, followed by more closely followed data from the Energy Information Administration on Wednesday morning. Analysts surveyed by S&P Global Platts, on average, look for the EIA data to show U.S. crude inventories fell by 4.7 million barrels in the week ended June 25.
Meanwhile, August gasoline futures
RB00,
RBQ21,
rose 1% to finish at $2.2415 a gallon, while August heating oil
HO00,
HOQ21,
gained 0.2% to close at $2.1271 a gallon.
August natural-gas
NG00,
NGQ21,
jumped 3.7 cents, or 1%, to end at $3.63 per million British thermal units, its highest close since Dec. 27, 2018, as record hot temperatures continue to bake the western U.S.
