Oil futures edged lower Monday, with weakness tied to concerns over the spread of the delta variant of the coronavirus that causes COVID-19 and reports of a crackdown by China on crude importers.
West Texas Intermediate crude for September delivery
was off 30 cents, or 0.4%, at $73.80 a barrel on ICE Futures Europe.
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.
Meanwhile, reports from India 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.”