Crude oil prices pushed higher Tuesday, reversing earlier losses as continued hopes of strong demand in the second half of the year overshadowed concerns over rising Covid-19 cases, APA reports citing Investing.
By 9:40 AM ET (1340 GMT), U.S. crude was up 1% at $73.63 a barrel, while Brent was up 0.9% at $74.77.
U.S. Gasoline RBOB Futures were up 0.9% at $2.2381 a gallon.
Concerns about the growth of Covid cases in the U.K. but also a number of Asian countries caused by the highly infectious delta strain weighed on sentiment early in Tuesday’s session.
Traditional holiday destinations for Britons, such as Spain and Portugal, have now imposed restrictions on unvaccinated travelers, while Hong Kong also announced plans to ban flights from the U.K.
However, these worries have dissipated as the day has progressed, helped by comments about rising demand ahead of Thursday’s meeting of the Organization of Petroleum Exporting Countries and its allies, a group known as OPEC+.
OPEC Secretary-General Mohammed Barkindo said that oil consumption in the second half of 2021 is expected to be 5 million barrels per day higher than in the first half of the year.
The group is widely expected to agree to an increase in supply in August, but there appears to be concern from some oil-producing countries that there will be oversupply in the global market once the summer holiday season ends.
“According to Bloomberg, numbers which will be shared at the OPEC+ Joint Technical Committee meeting today, show that if output is kept unchanged, then the market is estimated to see a deficit of 1.7MMbbls/d over August, and an average deficit of 1.9MMbbls/d over 2H21,” said analysts at ING, in a note.
This could mean that the group continues with its gradual increase of supplies rather than risk prices falling substantially with the agreement of a hefty increase..
Estimates of weekly U.S. crude oil inventory data by the American Petroleum Institute are due later in the day, with last week seeing a hefty draw of 7.2 million barrels.