Crude Oil Lower; Speculators Cut Longs on Covid Woes

© Reuters.

By Peter Nurse

AiVIF.com -- Crude oil prices edged lower Monday as concerns over the rising number of Covid-19 cases globally weigh on sentiment surrounding fuel demand outlook.

By 10 AM ET (1400 GMT), U.S. crude futures traded 0.3% lower at $71.86 a barrel, while the Brent contract fell 0.1% to $73.35.

U.S. Gasoline RBOB Futures were up 0.1% at $2.2640 a gallon.

New Covid-19 cases have been rising in Asia for a few weeks now, but sentiment in the oil market is starting to deteriorate as infections rise in the heavy energy-consuming countries of the west.

The United States will not lift any existing travel restrictions "at this point" due to concerns over the highly transmissible Covid-19 Delta variant and the rising number of U.S. coronavirus cases, Reuters reported Monday, citing a White House official.

Additionally, in Europe, German Chancellor Angela Merkel's chief of staff said on Sunday he fears the number of new coronavirus cases could soar to 100,000 a day in two months or so, while the French parliament on Monday approved a bill requiring the public to obtain a health pass through vaccination in order to enter a number of social venues.

“Any significant reversal of easing in restrictions in parts of Europe and the US would send a fairly bearish signal to the market, particularly when you consider the higher vaccination rates in those regions,” said analysts at ING, in a note.

Concerns that this increase in cases will result in a slower recovery in the services sector prompted Goldman Sachs (NYSE:GS) to cut its U.S. economic growth forecast for the remainder of the year on Monday. The influential bank dropped its growth forecast for both of the final two quarters of the year by 1 percentage point each, to 8.5% and 5.0% respectively.

Also of interest is the latest position data, with speculators reducing their net long positions in both the ICE (NYSE:ICE) Brent and NYMEX WTI contracts over the last reporting week. 

They cut their net long positions in ICE Brent by 50,786 lots to leave them with a net long of 261,841 lots, the smallest position since late May. The move was even larger for WTI, with speculators reducing their net long by 64,702 lots, leaving them with a net long of 316,789 lots, the smallest position speculators have held since November last year.