Hunting Bargains Propel Oil Bulls High

In early trading Monday, oil rallied after having fallen for seven straight days. As investors looked for bargains, questions remained on the impact of the ever-increasing number of COVID-19 cases around the globe on fuel demand.

In the early hours of Monday, Brent oil futures surged by 1% to trade at $65.59 a barrel after hitting their lowest level since May 21 in the previous session. August 22 was the rollover date for the Brent futures contract to Nov 21.

In the absence of OPEC and its allies rushing to restore production to pre-pandemic levels, strong consumption expectations may keep the price of oil afloat, although a further pickup in US output may drag on crude prices as they climb to their highest level since May last year.

After their dramatic drops during the previous week, oil prices recovered on Monday. With growing concerns over slower fuel demand worldwide, more adjustments are likely this week, but the market sentiment will likely remain bearish.

Several nations have tightened their restrictions on COVID-19’s Delta variant due to its widespread spread. After reaching a record number of daily new infections on Friday, Japan tripled its COVID-19 tests as a change in strategy.

The top oil importer in the world, China, had no new infections caused by locally transmitted COVID-19 daily. COVID-19 became an issue due to the country’s ‘zero tolerance’ policy, meaning it took strict restrictive measures to stop the country’s latest outbreak. This, in turn, caused disruptions to global supply chains because ports were closed.

However, if prices don’t break out of the range defined by the lows of July, then the next OPEC and non-OPEC Ministerial Meeting on September 1 may continue to be volatile.