Crude Oil Lower; Rising Covid Cases Weigh Ahead of OPEC

© Reuters.

By Peter Nurse

AiVIF.com -- Crude oil prices weakened Monday, retreating from multi-year highs amid concerns over rising Covid-19 cases in Asia and ahead of this week’s OPEC+ meeting.

By 9:35 AM ET (1335 GMT), U.S. crude was down 0.9% at $73.39 a barrel, just off the recent high of $74.45, the highest since June 2018, while Brent was down 0.8% at $74.77, after climbing to $76.60 late Friday, its highest since October 2018. 

U.S. Gasoline RBOB Futures were down 0.4% at $2.2519 a gallon.

The edge has been taken off the oil markets Monday, after gains of around 50% this year-to-date, on concerns over a spike in Covid-19 cases in Asia. Australian authorities have placed Sydney and Darwin into lockdown and put other major cities on high alert, in an attempt to contain outbreaks of the highly contagious delta variant.

Elsewhere, Indonesia is battling record-high cases, Malaysia will extend a national lockdown beyond Monday, and Thailand has announced new restrictions in the capital Bangkok and its suburbs.

However, the overall tone remains strong as fuel demand has rebounded in the high-energy consuming countries in Europe, the U.S. and China, in particular.

Attention is now turning to Thursday’s meeting of the Organization of Petroleum Exporting Countries and allies, a group known as OPEC+, where they are set to discuss supplies for August 2021.  

The group is expected to ease current supply curbs given the strength in the market, and concerns over recent tightness.

“Our expectation is that the group will agree on a 500Mbbls/d increase for August,” said analysts at ING, in a note. “Anything less than this amount would likely be enough to see bulls push the market higher in the near term.”

Speculative positioning was little changed over the last reporting week, with the OPEC+ meeting looming large. ICE (NYSE:ICE) Brent net longs fell by just over 2,500 lots over the last week to 309,732 lots as of last Tuesday. Nymex WTI net longs declined by a similar amount to 421,757 lots.