Oil opened the week little changed after a run of four monthly gains on signs that rising vaccine-aided demand was draining stockpiles, offsetting the risk posed by the spread of the delta virus variant.
West Texas Intermediate slipped 0.2% in early Asian trading, after climbing 2.6% last week. In the U.S., Anthony Fauci, the nation’s top infectious disease doctor, said Covid-19 vaccines work extremely well and that a return to the lockdowns of 2020 is unlikely, boosting the outlook for energy consumption.
Traders were also monitoring an uptick in tensions between Iran and the U.S. Washington has formally blamed Tehran for a deadly attack on an Israel-linked oil tanker off Oman, warning of an “appropriate response”. The standoff comes as the two nations are seeking to revive a nuclear accord that, if successful, may pave the way for an end to U.S. sanctions on Iranian oil flows.
Oil has soared this year — rising every month apart from March — as the global economic recovery from the pandemic stoked consumption. With activity picking up, crude stockpiles held at the key Cushing hub in Oklahoma have dwindled to the lowest level since January 2020. Against that backdrop, the Organization of Petroleum Exporting Countries and its allies have been easing supply curbs, with an extra 400,000 barrels a day to be released this month.
The highly infectious delta variant continues to spread rapidly in parts of Asia, clouding the outlook for mobility. Thailand is set to expand its quasi-lockdown measures to regions that are home to about 40% of the population. China is studying if it’s necessary to give booster shots to groups such as the elderly.
Brent’s prompt timespread was 82 cents a barrel in backwardation, a bullish pattern with near-dated prices trading above later-dated ones. The gap was 88 cents a barrel on the first trading day of July.
