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Oil settles lower in volatile trade on worries about Delta variant

08/03/2021 | 05:56pm EDT
FILE PHOTO: A diesel fuel nozzle with new European labels to standardise gas pumps in the EU zone is seen at a petrol station in Nice

NEW YORK (Reuters) -Oil settled lower on Tuesday, as concern about rising cases of the Delta coronavirus variant outweighed expectations for another weekly draw in U.S. inventories that had boosted prices early.

Brent crude oil futures settled down 48 cents, or 0.66% at $72.41 a barrel. U.S. West Texas Intermediate (WTI) crude settled down 70 cents, or 0.98% at $70.56 a barrel. Prices held lower in post-settlement trade after market sources said preliminary data suggested crude stocks drew in the United States. [API/S]

Concerns over the spread of Delta variant in the United States and China, the top oil consumers, weighed on prices, with both benchmarks falling more than 3% at one point.

In China, the spread of the variant from the coast to inland cities has prompted authorities to impose strict measures to bring the outbreak under control.

"The news flow out of China has been bearish since the weekend," said John Kilduff, a partner at Again Capital Management in New York. "There continues to be angst about the COVID-19 situation, which weighs on the petroleum complex the most."

Earlier, Brent and U.S. crude had risen more than 60 cents. Brent has risen more than 40% this year, helping earnings of oil firms.

"We're trying to price in how big the slowdown is going to be with the Delta variant," said Phil Flynn, senior analyst at Price Futures Group in Chicago.

BP, ConocoPhillips , Diamondback Energy Inc and Continental Resources Inc all reported strong second-quarter earnings this week.

Expectations of a return of Iranian crude to the markets also pressured prices. Iran and six powers have been in talks since April to revive a nuclear pact that could release its oil exports. But officials have said significant gaps remain.

Iran's new president, Ebrahim Raisi, said on Tuesday his government would take steps to lift "tyrannical" sanctions imposed by the United States on its energy and banking sectors.

The sixth round of indirect talks between Tehran and Washington adjourned on June 20, two days after Raisi was elected president. Parties involved in the negotiations have yet to announce when the talks will resume.

A Reuters poll showed U.S. crude and product inventories likely declined last week, with both distillates and gasoline stockpiles predicted to have fallen for a third straight week.

The American Petroleum Institute, a trade group, suggested U.S. crude stocks fell by 879,000 barrels in the week ended July 30, market sources said. The data showed that U.S. distillate inventories, including diesel, fell by 717,000 barrels for the week ended July 30, and U.S. gasoline stockpiles dropped by 5.8 million barrels.[API/S]

(Reporting by Jessica Resnick-Ault Additional reporting by Naveen Thukral in Singapore and Bozorgmehr Sharafedin in London; Editing by Marguerita Choy, Jason Neely and David Gregorio)

By Jessica Resnick-Ault

ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
CONOCOPHILLIPS -3.14% 57.07 Delayed Quote.42.71%
CONTINENTAL RESOURCES, INC. -2.74% 40.82 Delayed Quote.150.43%
LONDON BRENT OIL 0.31% 74.72 Delayed Quote.46.23%
MSCI SINGAPORE (GDTR) 0.30% 6486.843 Real-time Quote.12.58%
S&P GSCI BRENT CRUDE INDEX 0.86% 628.5966 Delayed Quote.43.94%
S&P GSCI CRUDE OIL INDEX -1.25% 389.0714 Delayed Quote.48.02%
WTI 0.38% 70.979 Delayed Quote.50.62%
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