Prices of the black fossil backed derivatives slipped at mid-week trading sessions of the week after breaking past October 2018 highs amid concerns over weakening global growth outweighed the prospect of tightening supply after OPEC talks ended in a deadlock.
The spread of COVID19 variants and unequal access to vaccines particularly in emerging markets weighed negatively on market sentiments with finance chiefs of the G20 large economies warning the global economy was not out of the wood yet.
At the time of drafting this report, the British-based oil contract, Brent crude futures lost more than O.2% in value as it traded around $76.24 a barrel while U.S. West Texas Intermediate crude with August delivery traded near $75 a barrel down by about 0.3%.
Both major oil benchmarks lost about 1% last week but still trade near highs last reached in October 2018.
Oil traders are becoming nervy about Covid-19 comeback in many economic regions that are being driven by the fast-spreading delta variant, which have added uncertainty to the short-term outlook in recent times.
The International Energy Agency is warning that oil supply will tighten if OPEC+ doesn’t resolve a standoff and boost production amid in spite of crude oil price posting year to date gains of more than 50%.
The upward momentum at the world’s most traded commodity derivative market got interrupted after the oil cartel group failed to agree on their output levels.
Recent price actions reveal oil bears are calling the shots, despite data from the American Petroleum Institute showing U.S. gasoline stockpiles dropped by 1.54 million barrels last week.
Thus, chances remain valid for oil prices to resume the expected bullish trend for the upcoming period, which depends on the price stability around the $75 a barrel support levels.
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Source: FX Empire