Oil futures headed lower on Monday, poised to end their four-session streak of gains as traders weigh demand prospects amid the spread of the delta variant of the coronavirus that causes COVID-19 and reports of a crackdown by China on crude importers.

“The spread of the delta variant of COVID-19 and the rising number of new cases in many countries carries a wide range of concerns, including backtracking on a global rebound for crude product demand,” said Robbie Fraser, global research and analytics manager at Schneider Electric.

Still, “demand levels continue to show signs of resiliency and have bounced back quickly in some of the regions that were hardest hit earlier in the year,” he said.

West Texas Intermediate crude for September delivery
CL00,
-0.60%

CLU21,
-0.60%

traded 44 cents, or 0.6%, lower to $71.63 a barrel on the New York Mercantile Exchange. September Brent crude
BRN00,
-0.18%

BRNU21,
-0.18%

was down 12 cents, or 0.2%, at $73.98 a barrel on ICE Futures Europe. Prices for both benchmarks settled lower in each of the previous four trading sessions.

Oil futures rose last week, shaking off a plunge last Monday as investors temporarily dumped equities and other assets perceived as risky in a selloff attributed in part to concerns around a renewed rise in COVID-19 cases. Those worries, however, continue to linger.

“Any significant reversal of easing in restrictions in parts of Europe and the U.S. would send a fairly bearish signal to the market, particularly when you consider the higher vaccination rates in those regions,” said Warren Patterson, head of commodities strategy at ING, in a note.

Meanwhile, expectations around the potential for Chinese oil imports to rise are being scaled back, analysts said.

“This is because the authorities are taking steps to combat import quota misuse and because of the high oil prices,” wrote analysts at Commerzbank.

In India, reports also point to muted oil demand, they said, noting June imports fell to a nine-month low, while crude-oil processing rose marginally from a low May level, which was influenced by pandemic restrictions.

“The considerable increase in fuel demand again following the lifting of restrictions in June has not yet translated into higher processing or higher imports on the part of refineries” in the country, they wrote. “In other words, it seems that they have been resorting instead to their stocks, which were plentiful due to the previously weaker demand.”

Expectations for higher oil production may pressure oil prices.

“On the supply side, OPEC+’s path to following through on plans to restore [400,000 barrels of oil a day] of output per month into 2022 should be closely watched, alongside U.S. production which is expected to inch higher to through the end of the year,” said Schneider Electric’s Fraser.

Baker Hughes
BKR,
+3.64%

reported on Friday a fourth straight weekly rise in the number of active U.S. oil drilling rigs, implying a production increase ahead.

Back on Nymex, August gasoline
RBQ21,
-0.02%

was little changed at $2.29 gallon and August heating oil
HOQ21,
+0.01%

shed nearly a cent to $2.13 a gallon.

August natural gas
NGQ21,
+0.39%

climbed 0.3% to $4.07 per million British thermal units, poised to mark another finish at the highest since December 2018.

“The market is rolling on the heat dome covering the Lower 48″ states, said Daniel Flynn, analyst at The Price Futures Group, in a daily report. “With the market fluctuating on weather and global demand numbers high, this market could be way undervalued.”

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