However, it's unlikely OPEC will increase output anytime soon, say sources: File Image/Pixabay
Bargain hunting investors and the expectation that oil producers won't ramp up production any time soon were credited for the commodity's modest price recovery on Tuesday, although concerns over the impact of the Delta variant seem to be unstoppable.
Brent rose 13 cents at $69.64 per barrel by 0055 GMT and West Texas Intermediate climbed by 14 cents to $67.43 per barrel on the strength of four sources telling Reuters that the Organization of the Petroleum Exporting Countries (OPEC) and its allies think markets do not need more oil than they plan to release in coming months, despite U.S. pressure to add supplies.
Also, Toshitaka Tazawa, an analyst at Fujitomi Securities Co Ltd., pointed out that "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."
Phil Flynn, senior market analyst, Price Futures Group Inc.
Poor data coming out of China is ground zero for reignited global concern
Still, gloomy sentiment persisted in the oil sector, summarized by Phil Flynn, senior market analyst at Price Futures Group Inc.; he said, "Poor data coming out of China is ground zero for reignited global concern surrounding Covid-19.
"Although indicators in the U.S. shows a better situation than China, as the second largest economy, what happens in the region has huge market impact."
Meanwhile, Nancy Davis, founder and chief investment officer at Quadratic Capital Management, warned that the U.S. could see a return of "stagflation," last seen in the 1970s, as a result of higher prices and slower growth.
She explained, "We're not having oil prices shock the market, but we are having higher labour costs because it's hard to get some workers in certain industries to come back" due to the pandemic.
Another worry for some people in the energy sector on Tuesday was Libya; specifically, the North African nation is producing roughly 1.3 million barrels per day (bpd), with a target of 1.5 million bpd by the end of 2021.
However, Mohamed Oun, oil minister for Libya, told media that "If the budget is not approved, there will be an impact and perhaps great difficulties in maintaining oil production rates."
The minister also said Libya was studying offers by foreign companies to invest in refining-related projects, without naming the firms.