🤑 It doesn’t get more affordable. Grab this 60% OFF Black Friday offer before it disappears…CLAIM SALE

Oil Prices Continue Weak Start to Week as Demand Worries Shackle Bulls

Published 08/17/2021, 03:53 PM
Updated 08/17/2021, 03:56 PM
© Reuters.
GS
-
CBKG
-
ICE
-
LCO
-
CL
-

By Yasin Ebrahim

Investing.com - Oil prices continued their weaker start to the week Tuesday, on signs further trouble is brewing on the demand side in Asia as the Delta variant continues to run rampant and threaten travel.

On the New York Mercantile Exchange, crude futures for September delivery fell 70 cents to settle at $66.59 a barrel, while on London's Intercontinental Exchange (NYSE:ICE), Brent slipped 48 cents to $69.03 a barrel.

China, the world’s largest energy consumer, reported that daily crude processing in July fell to its lowest level in 14 months, exacerbating investor concerns that demand is on the backfoot and will be dealt a further blow by travel restrictions brought on by rising Covid-19 cases.  

"[T]he decline in crude oil processing in China in July was for different reasons – however, it is feared that processing could fall even further in August because of the Delta variant, Commerzbank (DE:CBKG) said in a note.

The demand hit, however, is believed to be transient and is unlikely to keep a lid on prices for too long amid a supply deficit.

"Our base-case remains that this will remain a transient demand hit, with structural supply underinvestment increasingly clear," Goldman Sachs (NYSE:GS) said in a note, forecasting that the oil market deficit will persist through year-end. "[W]e estimate that the global oil market remains in a c. 1.5 million barrel per day deficit currently with global oil demand so far only down 1 mb/d from its summer peak reached mid-July."

Investors will look to weekly U.S. supply data to for further clues on supply-demand imbalance, with the U.S. expected to report a drawdown in weekly inventories.

U.S. petroleum inventory data from the American Petroleum Institute, an industry group, is due later in the session at 4:30 p.m., while official data from EIA is set to be released Wednesday 10:30 a.m.

The EIA is expected to report U.S. crude stockpiles fell just 1.1 million barrels last week, compared with a 0.5 million barrel decline in the prior week.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.