Oil Rebounds Above $70 on U.S. Strong Demand Despite Increase in COVID-19 Infections

Oil prices rose on Wednesday as the bullish outlook for U.S. demand outweighed concerns of the rising COVID-19 Delta variant.

The Brent crude oil, against which Nigerian oil is priced, gained 3 cents to $70.66 per barrel as at 8:30 am Nigerian time while the U.S. West Texas Intermediate (WTI) gained 6 cents or 0.1 percent to $68.35 a barrel.

U.S. industry data showed crude oil and gasoline inventories declined last week while the U.S. Energy Information Administration raised its forecast for fuel demand in 2021 and noted that consumption was higher than expected in May through July.

U.S. crude stocks declined by 816,000 barrels and gasoline stocks fell by 1.1 million barrels in the week ended August 6, according to data from the American Petroleum Institute.

“Oil prices rose on hopes that oil demand growth will outpace supply growth despite the spread of the highly transmissible Delta variant of Covid-19,” Commonwealth Bank commodity analyst Vivek Dhar said in a note.

Still, experts remain concerned about the rising COVID-19 outbreak in China, saying the restrictions could still dent demand.

“China’s Covid-zero strategy has seen mobility drop sharply. Sinopec, the nation’s biggest refiner, said it was cutting run rates at some plants by 5–10% amid weak demand,” ANZ research said.