(Bloomberg) — Oil edged higher after a two-day gain amid optimism that fuel demand will keep rising, despite a Covid-19 resurgence in many regions.
Futures in New York traded near $75 a barrel after climbing more than 2% on Friday. The rollout of vaccines and rebound in economic activity in major economies, particularly the U.S., has underpinned the increasing fuel consumption. The spread of the virus’s delta variant and uncertainty over supply from the OPEC+ alliance are clouding the outlook, however.
Oil’s upward momentum was interrupted last week after an OPEC+ meeting on output levels was abandoned. Crude capped its first weekly loss since May — despite an end-of-week rally — with the stalemate raising concern the group’s unity may fracture and lead to a price war. The alliance had been widely expected to restore more of the production sidelined during the pandemic.
See also: Oil Bears Will Play Until OPEC Finds a Compromise: Julian Lee
The International Energy Agency will provide investors with a snapshot of the market on Tuesday with the release of its monthly report, while OPEC will also release its monthly report on Thursday.
The market’s bullish structure has eased slightly on the OPEC+ uncertainty. The prompt timespread for Brent was 83 cents a barrel in backwardation — where near-dated contracts are more expensive than later-dated ones. That compares with 99 cents a week earlier.
The coronavirus remains a constant source of concern. The U.S. reported the most cases since mid-May as delta takes hold in less vaccinated areas. French officials warned of a new wave, while U.K. Prime Minister Boris Johnson will warn people to stay vigilant as he prepares to lift virtually all remaining restrictions in England. In Asia, Indonesia is in the throes of a major outbreak and case numbers are also high in Thailand and Malaysia.
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