Still, some analysts warn that the Covid variant will cause headwinds: File Image/Pixabay
Yet more evidence that demand fears due to the Delta variant are overblown caused a third straight session of gains for crude prices on Wednesday; but this didn't prevent some analysts from repeating their familiar warning that rising Covid infections would continue to make market headwinds.
After the U.S. Energy Information Administration reported that gasoline inventories declined by 2.24 million barrels last week with fuel consumption rising to the highest in a month (defying expectations that Delta would compel people to stay home), Brent rose $1.20, or 1.7 percent, to settle at $72.25 per barrel.
West Texas Intermediate gained 82 cents, or 1.2 percent, to end at $68.36 per barrel.
Brian Kessens, Tortoise Capital Advisors
The delta variant isn't impacting oil demand
Brian Kessens, a portfolio manager at Tortoise Capital Advisors, noted that declining inventories at a time when net petroleum imports are up "is a bullish sign, indicating that the delta variant isn't impacting oil demand, at least not for crude and gasoline."
The spread of gasoline over crude oil rose more than 12 percent; "A lot of Americans are willing to get out and live their lives in the midst of Covid," said Robert Yawger, director of futures division at Mizuho Securities.
Still, Bart Melek, head of global commodity strategy at TD Securities, remarked that the crude market will continue to face headwinds from the Delta variant because it will take time for the full Pfizer vaccine approval to increase vaccination rates.
Edward Moya, senior market analyst at OANDA, was more optimistic in his near term outlook for demand: he told media that "With many corporations and government agencies likely to enforce vaccine mandates, return to office travel should dramatically pick up in the fall."
Meanwhile, concerns about lost production due to the fire on Petroleos Mexicanos' (Pemex) offshore platform fire were somewhat assuaged on Wednesday when the state owned firm announced that it expects to resume output by August 30.
The accident in the Gulf of Mexico knocked 125 wells offline, totalling 421,000 barrels per day (bpd) of lost output; however, 71,000 bpd "have been recovered and we will reestablish 110,000 additional barrels by opening another 29 wells in the next 36 hours," said Octavio Romero, chief executive of Pemex.