U.S. FDA approval of Covid vaccines also buoy sentiment: File Image/Pixabay
With a 3 percent price gain on Tuesday, oil managed to claw back last week's 7.6 percent loss, the biggest weekly decline in over nine months, with investors buoyed by the US Food and Drug Administration fully approving the Pfizer/BioNTech two-dose Covid vaccine.
Also boosting sentiment was China's apparent success in quashing the spread of the Delta variant; local virus cases are down to zero, road traffic is recovering, and Ningbo Port, one of the busiest in the world, reopened after a two-week shutdown.
Phil Flynn, senior market analyst at Price Futures Group Inc., said, "The developments out of China are reigniting expectations that oil demand would start to rise again."
Phil Flynn, senior market analyst, Price Futures Group Inc.
China developments "are reigniting expectations that oil demand would start to rise again"
Adding to the good news was the American Petroleum Institute reporting a 1.6 million barrel decline in U.S. crude stockpiles last week, and a nearly 1 million barrel drop in gasoline stocks.
Brent on Tuesday settled up $2.30 or 3.4 percent at $71.05 per barrel, while West Texas Intermediate gained $1.90 or 2.9 percent to settle at $67.54; Tuesday's gains pushed the commodity up more than 8 percent for the week.
Meanwhile, a development that could affect supply numbers was a fire on an oil platform in Mexico, which has reportedly wiped out more than 400,000 barrels per day (bpd) of the nation's output; this is roughly the equivalent of what the Organization of the Petroleum Exporting Countries (OPEC) will consider adding to the market when it meets next month.
Tuesday also saw good news for Saudi Arabia, which was hard hit last year due to the Covid restrictions: official data showed that the kingdom's oil exports in June increased 123 percent to 61.5 billion riyals ($16.4 billion) from a year earlier, while non-oil exports rose by around 41 percent.
Additionally, while it was revealed on Tuesday that India's July crude oil imports slumped to their lowest in a year, they are expected to rebound in August as refiners boost post-maintenance runs.