TOKYO – Oil prices rose more than 1% on Tuesday, picking up some of the losses in the previous session when prices hit a three-week low, but gains are likely limited by concerns that rising oil prices hit a three-week low. COVID-19 cases and restrictions in China take a toll on fuel demand.
Brent crude was up 84 cents, or 1.2%, at $ 69.88 a barrel at 0656 GMT, after falling 2.3% on Monday. US oil rose 99 cents, or 1.5%, to $ 67.47 a barrel, after falling 2.6% in the previous session.
China on Tuesday reported more COVID-19 infections in the latest outbreak of the disease that was first detected in the country in late 2019, in what analysts said was the biggest test of China’s zero-infection strategy. Beijing.
Some cities in China, the world’s leading crude oil importer, have stepped up massive testing as authorities try to eradicate locally transmitted infections of the highly transmissible Delta variant of the coronavirus.
“In the short term, the oil market can be volatile with frequent pullbacks as crude prices start to struggle,” said Avtar Sandu, senior manager of commodities at Phillip Futures in Singapore, adding that any deep pullbacks in pricing is a buying opportunity.
“There is a possibility that more Iranian, UAE and Libyan barrels will flood the market, but we expect global GDP growth to sustain energy demand,” he said.
In the United States, the Senate is set to vote to pass a $ 1 trillion infrastructure bill later Tuesday, which, if passed, would boost the economy and demand for oil products, analysts said.
But the increasing cases of COVID-19 are ruining the prospects for economic growth and consumption in general.
Investors are also questioning the recovery in the US amid the surge in the number of cases. Air travel in the United States has been stagnant for nearly two months amid ongoing travel restrictions, ”ANZ Research said in a note.
Still, US crude, gasoline and other product inventories are likely to have fallen in the past week, and gasoline stocks are forecast to fall for the fourth straight period, a preliminary Reuters poll showed on Monday.
Crude inventories are expected to have fallen about 1.1 barrels in the week to Aug. 6, according to the average estimate of six analysts polled by Reuters.
(Reporting by Aaron Sheldrick; Editing by Richard Pullin and Shri Navaratnam)