Following a brief recovery, WTI is on the market, pulled down by covid fears.
OPEC is also a medium-term threat.
Oil prices are down 0.70 percent as Wall Street closes, with WTI falling from a high of $74.90 to a low of $73.19.
Concerns regarding the spread of COVID-19 mutations are jeopardizing the global economic recovery.
Despite vaccines that are said to be very successful against the Delta variety, global leaders such as Boris Johnson of the United Kingdom have warned that “this pandemic is not over.”
Instead, there are fears that a viral outbreak could occur, as predicted by G20 financial officials over the weekend, putting pressure on prices in the morning.
Both benchmarks, WTI and Brent, lost roughly 1% last week in the run-up, falling further away from levels last seen in October 2018.
In this regard, Asia, as a swing demand center for the energy market, is a key source of concern.
Less than two weeks before the Summer Olympic Games, Tokyo has reimposed pandemic-related restrictions.
Meanwhile, the Organization of Petroleum Exporting Countries and its Allies (OPEC+) failed to reach an agreement on output last week, raising the possibility of producers quitting the arrangement altogether in the long run.
As a result, supply risk is a concern moving forward.
“As long as the OPEC impasse keeps the status quo production agreement in place, a more aggressive tightening is expected in the near term,” according to TD Securities analysts. “This could lead to a temporary and significantly larger-than-anticipated deficit, which should fuel higher prices for the time being,” they added.
On the other hand, stockpiles in the world’s largest crude-producing nation have tightened even more, with US inventories falling to their lowest level since February 2020 in the week ending July 2./n
