Oil futures moved higher Tuesday, bouncing after holding support above the July lows seen in a sharp selloff during the previous session which was blamed partly on fears the global spread of the delta variant of the coronavirus that causes COVID-19 would dent energy demand.
“Oil prices are likely to remain volatile as the outlook for the economic recovery becomes increasingly uncertain, with a rise in cases of the delta variant in Asia continuing to be a reason for concern…,” said Ricardo Evangelista, senior analyst at ActivTrades, in a note.
At the same time, “the U.S. the Senate will vote on the deployment of a massive infrastructure bill, which, if approved, will certainly increase demand for oil,” he said.
West Texas Intermediate crude for September delivery
was up 93 cents, or 1.3%, at $69.97 a barrel on ICE Futures Europe.
WTI and Brent fell by more than 4% at session lows Monday before trimming losses, closing at their lowest levels since July 19. Moves by China, the world’s largest oil importer, to restrict business and consumer activity in an effort to contain low but growing numbers of delta-variant cases were cited as a reason for the selloff.
Worries about demand from China extended beyond oil, with some economists arguing that a cooling of the country’s appetite for a range of commodities was likely here to stay.
Moves by U.S. companies to delay planned returns to the office were also a factor, analysts said.
But the July WTI contract managed to close Monday above the July low at $66.41, marking that level as a “‘line in the sand’ for the oil market,” said Tom Essaye, founder of the Sevens Report, in a note.
“If support holds, which it likely will as long as the news flow regarding COVID does not continue to materially deteriorate, then WTI will remain rangebound between aforementioned support at $66 and resistance from July at $75 a barrel,” he said.
The Senate could pass a $1 trillion infrastructure bill later Tuesday. The proposal includes $550 billion in spending on transportation, utilities and broadband internet.
September natural gas
edged up 0.1% at $4.063 per million British thermal units.