Oil prices pare earlier gains amid worries over COVID case spike

Shafaq News / Oil prices were mixed on Tuesday, paring earlier gains, as expectations that major producers will not boost supply any time soon were offset by worries over slowing global fuel demand amid a spike in the Delta variant of coronavirus infections.

Brent crude was down 2 cents at $69.49 a barrel as of 0410 GMT, after rising as high as $69.77 earlier in the session.

U.S. West Intermediate crude (WTI) edged 2 cents higher to $67.31 a barrel, after reaching $67.66 earlier.

Brent slid 1.5% on Monday while WTI fell 1.7%.

The prices recovered from the previous day's losses in early Asia trade after four sources told Reuters that OPEC+ - the Organization of the Petroleum Exporting Countries and its allies, including Russia - believes oil markets do not need more crude than they plan to release in the coming months, despite U.S. pressure to add supplies to check an oil price rise.

Last week, U.S. President Joe Biden's administration urged the producer group to boost oil output to tackle rising gasoline prices that they see as a threat to the global economic recovery.

But the market ran out of steam mid-session amid concerns over the resurgence in the COVID-19 pandemic.

Worries over weaker demand in China, the world's biggest oil importer, grew on Monday after the nation's daily crude processing last month fell to the lowest since May 2020 as independent plants slashed production amid a tighter quotas, high inventories and weakening profits.

China's factory output and retail sales growth also slowed sharply and missed expectations in July, as new COVID-19 outbreaks and floods disrupted business operations, adding to signs the economic recovery is losing momentum.

Hedge funds sold petroleum last week for the sixth time in eight weeks as resurgent coronavirus infections in China, Europe and North America dampened hopes of a rapid resumption in long-distance passenger aviation.

Still, the market shrugged off rising output in U.S. shale oil, Toshitaka Tazawa, an analyst at Fujitomi Securities Co Ltd said.

U.S. shale oil output is expected to rise to 8.1 million barrels per day (bpd) in September, the highest since May 2020, according to the Energy Information Administration's monthly drilling productivity report on Monday.

Source: Reuters