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Oil resumes drop as supply concerns weigh



LONDON:

Oil dropped towards $68 a barrel on Tuesday, extending the previous session’s steep slide, pressured by concern that rising Covid-19 infections could weaken demand again just when OPEC+ is increasing supply.

Monday’s sell-off had pushed oil to a two-month low and hit other riskier assets. While equities avoided a new sell-off on Tuesday, US Treasury and German bond yields also slipped as a reminder that investors remained worried.

“As things stand, it is hard to see prices staging a comeback unless virus jitters are brought back under control,” said Stephen Brennock of oil broker PVM. “The market is clearly unsettled about the demand outlook.” Brent crude fell 23 cents, or 0.3%, to $68.39 a barrel by 1353 GMT, having slid by 6.8% on Monday.

US crude for August, which expires later on Tuesday, was down by $1.19, or 1.8%, at $65.23 after falling 7.5% on Monday. The September US crude contract was down 1.6% at $65.31.

Read More: Oil resumes drop as supply concerns weigh

Organisation of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, agreed on Sunday to increase output from August, unwinding more of the supply curbs put in place when the pandemic struck last year.

The Delta coronavirus variant is now the dominant strain worldwide, US officials said on Friday.

 

Published in The Express Tribune, July 21st, 2021.

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