Oil rises but COVID-19, supply concerns cloud outlook | Reuters

Oil rises but COVID-19, supply concerns cloud outlook | Reuters

Oil prices stabilised on Tuesday after slumping around 7% in the previous session amid a broader market retreat led by concerns about rising COVID-19 infections, which came just as producers inked a new supply deal.

Brent crude gained 70 cents, or 1%, to $69.32 a barrel by 0651 GMT. The U.S. crude contract for August delivery, which expires later on Tuesday, was up 86 cents, or 1.3%, at $67.28 a barrel. U.S. crude for September delivery was up around 1.2% at $67.14 a barrel.

The selloff, which pushed prices to their lowest in two months, was driven by concerns about the Delta variant of the coronavirus that is rampaging through populations, analysts said, with equities falling and bonds rising.

“Rising cases of the Delta variant of the coronavirus in some Asian and European countries and possibilities of travel restrictions have increased crude oil demand uncertainty to some extent,” analysts at ING Economics said in a note.

“However, the crude oil physical market has been tight over recent months, with the ongoing economic recovery likely to remain supportive for oil demand over the second half of the year,” they said.