Pump jacks at the Belridge Oil Field and hydraulic fracking site which is the fourth largest oil field in California.
Citizens of the Planet | Universal Images Group | Getty Images
Oil prices rose on Tuesday, recovering from the previous day’s losses, as investors sought bargains and on expectations that major producers will not boost supply soon, though fears of weaker global demand amid surging pandemic capped gains.
Brent crude was up 13 cents, or 0.2%, at $69.64 a barrel by 0055 GMT, after falling 1.5% on Monday.
U.S. oil climbed by 14 cents, or 0.2%, to $67.43 a barrel, having lost 1.7% the previous day.
The rebound comes after four sources told Reuters that OPEC and its allies, including Russia, believe oil markets do not need more oil than they plan to release in the coming months, despite U.S. pressure to add supplies to check an oil price rise.
Last week, U.S. President Joe Biden’s administration urged the producer group to boost oil output to tackle rising gasoline prices that they see as a threat to the global economic recovery.
“WTI has a support at around $65 and investors tend to look for bargains whenever the benchmark gets closer to the level as we have seen on Monday and last week,” said Toshitaka Tazawa, an analyst at Fujitomi Securities.
The market shrugged off rising output in U.S. shale oil, he added.
U.S. shale oil output is expected to rise to 8.1 million barrels per day (bpd) in September, the highest since May 2020, according to the Energy Information Administration’s monthly drilling productivity report on Monday.
“But any gains in oil prices will likely be limited as a spike in coronavirus delta variant infections worldwide fueled concerns over slowing global fuel demand,” Tazawa said.
Worries over weaker demand in China, the world’s biggest oil importer, grew on Monday after the nation’s daily crude processing last month fell to the lowest since May 2020 as independent plants slashed production amid a tighter quotas, high inventories and weakening profits.
China’s factory output and retail sales growth also slowed sharply and missed expectations in July, as new Covid-19 outbreaks and floods disrupted business operations, adding to signs the economic recovery is losing momentum.
Hedge funds sold petroleum last week for the sixth time in eight weeks as resurgent coronavirus infections in China, Europe and North America dampened hopes of a rapid resumption in long-distance passenger aviation.