CRANBURY, N.J. (DTN) -- Oil futures nearest delivery on the New York Mercantile Exchange and the Brent futures contract on the Intercontinental Exchange reversed off fresh lows to end Tuesday's session higher following Monday's rout on spiking COVID-19 cases and ahead of weekly supply data. August West Texas Intermediate futures expired $1 higher in the backwardated market.
Concern over the potential loss of economic growth and oil demand following a sharp increase in COVID-19 cases in recent days amid a highly contagious Delta variant that sparked Monday's sell-off in oil and equities appears overdone, with equities rallying back Tuesday. After losing 725 points Monday, Dow Jones Industrials were up 550 points late afternoon Tuesday.
While markets rebounded off lows, surging COVID-19 cases in the United States and globally have clouded the outlook for oil demand growth during the remainder of 2021, casting doubt over previous outlooks that pointed to a steep drawdown from global oil inventories. New restrictions could inhibit travel activity, especially by air and cruise ships if countries close borders.
Centers for Disease Control and Prevention indicate 161.5 million people in the United States are fully vaccinated out of a population of 332 million, although the percentage of people over 18 years of age that are fully vaccinated is more than 10% higher at 59.5% of the U.S. population.
John Hopkins University and Medicine's Coronavirus Resource Center shows COVID-19 cases surging in the U.S. Northeast and Mid-Atlantic states, in Chicago and surrounding metro regions, in southern Florida, eastern Texas, and the Pacific Southwest and Northwest. Globally, John Hopkins reports 61,628 new cases in Spain, 40,671 new cases in the United Kingdom, 34,257 new cases in Indonesia, 30,093 new cases in India, with 52,111 new cases in the United States.
The spike in cases caught the investing world off balance and could lead to slower economic growth. The Federal Reserve in late June projected the U.S. economy would grow at a 7% annualized rate in 2021, up from their 6.5% growth rate expected in March.
NYMEX August WTI futures expired at $67.42 barrel (bbl), with the September contract settling $0.85 higher at $67.20 bbl. ICE September Brent crude futures settled with a $0.73 gain at $69.35 bbl. NYMEX August RBOB futures gained 2.11 cents to $2.1315 gallon on the session, with August ULSD futures up 2.75 cents at $2.0127 gallon.
Market expectations call for a 3.7 million bbl drawdown in commercial crude stocks to have taken place last week according to a Wall Street Journal survey, with gasoline stocks seen to have fallen 1.1 million bbl and for distillate stocks to have increased by 700,000 bbl.
Brian L. Milne can be reached at firstname.lastname@example.org