Oil Up, Investors Predict Further Fall in U.S. Crude Inventories

© Reuters.

By Gina Lee

AiVIF.com – Oil was up Tuesday morning in Asia. The black liquid clawed back some gains from Monday’s losses ahead of U.S. crude oil supply data from the American Petroleum Institute (API) with investors expecting a further decline in inventories.

Brent oil futures were up 0.24% to 75.34 by 11:51 PM ET (3:51 AM GMT) after losing 0.5% during the previous session. WTI futures gained 0.30% to $74.32, having fallen 0.6% on Monday.

"Optimism about tight supply and declining U.S. crude stockpiles lent support," Fujitomi Co. analyst Toshitaka Tazawa told Reuters, adding that bullish global shares also helped boost risk appetite among investors.

"Still, growing concerns over a spike in COVID-19 infection cases worldwide and uncertainty over production plans by the Organization of the Petroleum Exporting Countries and allies (OPEC+) will likely limit gains," he added.

Investors continue to monitor OPEC+’s progress in resolving a price dispute between Saudi Arabia and the United Arab Emirates. The dispute prevented the cartel from reaching a deal to raise oil output from August 2020 onwards, with another policy meeting within the week reportedly unlikely.

Investors now await the API crude oil supply data, due later in the day. U.S. crude inventories have fallen to their lowest levels since February 2020 in the week to Jul. 2 thanks to several consecutive weeks of draws.

A rally in global stocks, with U.S. equities closing at record levels during the previous session, also boosted investor sentiment.

Fresh restrictive measures to contain COVID-19 outbreaks involving the Delta variant of the virus in countries such as Australia and South Korea could also dim the fuel demand outlook as economic recovery slows down. COVID-19 vaccination rates are also slowing in some countries, while others face vaccine shortages as the Delta variant becomes dominant, according to the World Health Organization.