MELBOURNE, Australia – Oil prices fell for a second day on Tuesday, weighed down by concerns about slower fuel demand growth as outbreaks of the highly contagious COVID-19 variant Delta prompted additional travel restrictions throughout the world. WTI crude futures in the United States slid 14 cents, or 0.2 percent, to US$72.77 a barrel at 0045 GMT, extending a 1.5 percent fall on Monday.
After falling 2% on Monday, Brent crude futures fell 10 cents, or 0.1 percent, to US$74.58 a barrel.
The flare-up in Delta cases comes as the Organization of Petroleum Exporting Countries (OPEC), Russia, and allies, together known as OPEC+, prepare to meet on July 1 to consider loosening supply restrictions.
According to OPEC’s demand predictions, global oil supply will fall short of demand by 2.2 million barrels per day (bpd) in the fourth quarter, providing producers some leeway to agree to increase output.
“Oil prices fell on fears that OPEC+ may vote to significantly increase supply later this week, just as the Delta variant of the coronavirus spreads,” Commonwealth Bank commodities analyst Vivek Dhar wrote in a note.
On Monday, unvaccinated Britons were subjected to new restrictions in Spain and Portugal, while 80 percent of Australians were subjected to harsher restrictions due to outbreaks of the virus across the country.
The Financial Times reported, quoting authorities, that talks on a travel corridor between the United States and the United Kingdom had halted, partially because to fears about an increase in cases of the Delta strain in the United Kingdom.
Analysts predict OPEC+ to increase supply by roughly 500,000 bpd in August, as the market tightens due to robust rise in fuel demand in the world’s two largest oil users, the United States and China.
According to a preliminary Reuters poll, investors will be looking to the latest U.S. inventory data to confirm that view, with analysts anticipating crude stocks to fall for the sixth week in a row, while gasoline stocks also fell.
In a poll done ahead of data from the American Petroleum Institute, an industry group, on Tuesday and the Energy Information Administration (EIA), on Wednesday, seven analysts anticipated that U.S. crude stocks declined by around 4.5 million barrels on average in the week ending June 25.
(Sonali Paul contributed reporting, and Christian Schmollinger edited the piece.)
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