Oil prices have changed little, coronavirus, floods threaten demand

SINGAPORE, July 26 (Reuters) – Oil prices were little changed on Monday as investors balanced concerns over fuel demand resulting from the spread of COVID-19 variants and flooding in China against expectations of a shortage of fuel. supply for the rest of the year.

Brent crude futures for September fell 3 cents to $ 74.07 per barrel at 0153 GMT while U.S. Texas Intermediate crude was at $ 71.99 per barrel, down 8 cents.

Both contracts recovered from a 7% drop last Monday and marked their first gains in 2-3 weeks last week, with investors betting demand would remain strong amid lower oil and gas inventories. increased vaccination rates.

“We saw an overreaction in the market last Monday, and like all other technical corrections so far, the oil slowdown has generally been short-lived,” said Howie Lee, economist at OCBC Bank of Singapore.

“Bargain hunters came in droves when Brent fell below $ 70 and economic demand for energy looks strong.”

However, coronavirus cases continued to rise over the weekend, with some countries seeing record daily increases and extending lockdown measures that could slow demand for oil. China, the world’s largest importer of crude, has also seen an increase in COVID-19 cases as the country battles severe flooding and a typhoon in the center and east of the country. Read more

In addition, Beijing’s crackdown on the abuse of import quotas combined with the impact of high crude prices could see China’s oil import growth fall to two-decade low in 2021, despite a decline. expected increase in refining rates in the second half of the year. Read more

However, expectations of tight supply are supporting prices.

Global oil markets are expected to remain in deficit despite the decision of the Organization of the Petroleum Exporting Countries and Their Allies to increase production until the end of the year.

The prospect of a quick return to Iranian supplies is diminishing as talks to revive a 2015 nuclear deal have been pushed back to August. Meanwhile, the United States is considering cracking down on Iranian oil sales to China, as it braces for the possibility that Tehran will not return to nuclear talks or take a tougher line each time it does, a said an American official. Read more

In the United States, the recovery in oil drilling has been modest as producers restrained spending. U.S. oil rigs rose seven to 387 last week, their highest level since April 2020, energy services firm Baker Hughes Co (BKR.N) said on Friday.

Reporting by Florence Tan; Editing by Ana Nicolaci da Costa

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