MOSCOW (MRC) -- Crude oil futures were lower during mid-morning Asian trade Aug. 16 as investor concerns over the fast spreading delta variant resurfaced amid restrictive movement curbs in oil consuming giant China and growing number of cases in the US, reported S&P Global.
At 10:51 am Singapore time (0251 GMT), the ICE October Brent futures contract was down 80 cents/b (1.13%) from the previous close at USD69.79/b, while the NYMEX September light sweet crude contract similarly fell 77 cents/b (1.13%) at USD67.67/b.
"The delta (variant) worries are tightening their grip on oil market sentiment," Vandana Hari, CEO of Vanda Insights, said. "The summer travel and tourism boom in the West is petering out, while the virus continues to fester in pockets across the world."
Oil demand in China has taken a hit in recent weeks after growing COVID-19 cases in the country prompted the government to impose strict movements curbs to bring the virus under control.
Most notably, the country's zero-tolerance approach to COVID-19 led to the closure mid-last week of its Meishan terminal at the world's third-busiest port, namely the Ningbo-Zhoushan port, which is expected to disrupt supply chains globally.
"The centre of demand remains China, where a COVID-zero approach by Chinese authorities has seen strict guidelines on movement to curb more infections," ANZ analysts said in a note.
"At least 144 areas, including 20 cities, have been (categorized) as having a medium to high virus risk, a measure that could see all public transport shut down," they added.
Nonetheless, recent case numbers in China suggest the movement curbs are working. The National Health Commission recorded 24 locally transmitted cases in the country as of Aug. 14, down by 6 on the day and also significantly lower than the high of 108 cases for the month on Aug. 10.
Analysts said the Aug. 16 dip in oil markers may be short-lived as investors take time to reassess the supply-demand outlook as the week progresses.
COVID-19 case numbers in the US have continued to grow. The US Centers for Disease Control and Prevention on Aug. 12 reported its highest number of COVID-19 cases since January 2021 at 146,949. The seven-day moving average stood at 119,523 as of Aug. 13, more than six times the average at the start of July.
As MRC informed earlier, crude oil stockpiles fell modestly last week, while gasoline inventories dipped to their lowest level since November, according to the US Energy Information Administration. Crude inventories fell by 447,000 barrels in the week to Aug. 6 to 438.8 million barrels, compared with analysts' expectations in a Reuters poll for a 1.3 million-barrel drop. Overall crude inventories have been on the decline for several weeks due to increased demand.
We remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, the US Energy Information Administration (EIA) said in a monthly report, a smaller decline than its previous forecast for a drop of 210,000 bpd.
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