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Oil futures edged lower Tuesday, a day after the U.S. benchmark suffered its biggest one-day decline since March, as signs of a tight physical market help soothe worries over the economic outlook tied to the spread of the delta variant of the coronavirus that causes COVID-19.
West Texas Intermediate crude for September delivery
CL00,
CLU21,
fell 9 cents, or 0.1%, to $66.26 a barrel on the New York Mercantile Exchange. August crude
CLQ21,
was down 9 cents, or 0.1%, at $66.33 a barrel. The U.S. benchmark fell more than 7% Monday, its biggest drop since March 26.
September Brent crude
BRN00,
BRNU21,
the global benchmark, fell 19 cents, or 0.3%, to $68.43 a barrel on ICE Futures Europe.
Crude tumbled along with equities and other assets perceived as risky on Monday as worries about the rise in Covid cases globally resulting from the delta variant of the coronavirus sent ripples across financial markets. Crude was also weighed down after the Organization of the Petroleum Exporting Countries and its allies — OPEC+ — agreed over the weekend to further relax output curbs.
But analysts said downside is likely to remain limited given underlying signs of healthy demand as the global economy recovers from the pandemic.
“The crude oil physical market has been tight over recent months, with the ongoing economic recovery likely to remain supportive for oil demand over the second half of the year,” said Warren Patterson, head of commodities strategy at ING, in a note.
“The output increments from the OPEC+ will help ease the supply tightness somewhat for the rest of the year but may not be sufficient to fill the entire supply gap, according to the IEA estimates released earlier in the month,” he said.
