Oil Steadies After Two-Day Decline as Investors Assess Outlook

(Bloomberg) — Oil steadied after a two-day decline as investors assessed a demand outlook clouded by the comeback of Covid-19 in many regions.

Futures traded above $68 a barrel in New York after falling more than 2% over the past two sessions. While there are pockets of robust demand emerging in some regions including Europe, the fast-spreading delta variant of the virus has resulted in renewed lockdowns in other areas. A stronger dollar has also made commodities priced in the currency more expensive.

Oil has slipped below its 100-day moving average, while the gap over the 50-day marker has widened, a bearish signal that may see further selling.

Oil’s sizzling rally from the depths of the pandemic has been interrupted as the spread of delta curbed fuel consumption. However, China, the world’s largest oil importer, has managed to contain its outbreak of the variant, and there are expectations that the market will tighten through the end of the year.

The prompt timespread for Brent was 64 cents a barrel in backwardation — a bullish structure where near-dated contracts are more expensive than later-dated ones. That compares with 60 cents on Monday.

Covid-19 infections jumped to a one-year high in Singapore and the city-state isn’t ruling out re-imposing restrictions, while the Philippines has backtracked on easing curbs in the capital region. In the U.S., the death toll topped 650,000, although three-quarters of adults have now taken at least one vaccine dose.

The market will get a snapshot on Thursday of Hurricane Ida’s impact on U.S. stockpiles. Gasoline inventories probably slid by about 3.7 million barrels last week, according to a Bloomberg survey. That would be the most in five weeks if confirmed by official data. Crude supplies are expected to fall by 6 million barrels.

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