Crude oil prices returned to the bullish territory on Tuesday as a surprise build in stockpiles held back traders who rushed to buy the commodity at lower prices.
The Brent crude rose by 20 cents or 0.43 per cent to close at $69.05, while the West Texas Intermediate recorded a growth of 29 cents or 0.43 per cent to sell at $66.91.
The American Petroleum Institute (API) on Tuesday reported a build in crude oil inventories of 806,000 barrels for the week ending July 16, bringing the total 2021 crude draw so far to a hair under 50 million barrels, using API data.
Analysts had expected a loss of 4.333 million barrels for the week.
In the previous week, the API reported a draw in oil inventories of 4.079 million barrels, largely in line with analyst predictions for a draw of 4.333 million barrels.
The price of both benchmarks had risen more than 50 per cent so far this year, but slipped more than 7 per cent on Monday as the Organisation of the Petroleum Exporting Countries and allies (OPEC+) agreed to ramp up production by 400,000 barrels per day.
Monday’s selloff, spurred by demand destruction fears amid rising COVID-19 cases, pushed oil about 7 per cent lower and hit other riskier assets.
Crude oil futures then rebounded on Tuesday as market participants vied to take advantage of oil’s two-month low touched in the previous session.
But the fear of higher inventories and fears that a surge in the Delta variant of the coronavirus threatens oil demand prospects still persist.
If confirmed by government figures from the Energy Information Administration (EIA) on Wednesday, a crude stockpile draw would end an eight-week streak of inventory declines.
The Delta variant of COVID-19 is now the dominant strain worldwide, accompanied by a surge of deaths around the world.
The US has warned citizens to not travel to the United Kingdom and Indonesia amid an increase in infections, and Singapore will tighten restrictions on dining-in and social gatherings.
Goldman Sachs Group said the variant may curb global oil demand by one million barrels a day for a couple of months, though that’s offset by a slow production ramp-up from OPEC+.