By Peter Nurse
Investing.com -- Crude oil prices pushed higher Thursday, trading back above $70 a barrel and helped by a broader market rally which has recently outweighed concerns about the impact on energy demand from the rise in global Covid cases.
By 10:05 AM ET (1405 GMT), U.S. crude futures traded 0.4% higher at $70.58 a barrel, while the Brent contract rose 0.4% to $72.51.
U.S. Gasoline RBOB Futures were up 0.9% at $2.2355 a gallon.
The crude market has been very volatile this week, plunging on Monday on worries over rising coronavirus cases and an agreement between top producers to add supply, before rebounding over the last two days.
U.S. crude oil supply data from the EIA released on Wednesday showed a build of just over 2 million barrels last week to July 16, ending a run of eight weeks of declines. Normally this would be seen as bearish for the market, but the EIA data also showed a 121,00-barrel draw in gasoline inventories, an indication that demand remains high amid the summer driving season.
Additionally, “we believe that the latest agreement between OPEC+ to increase output and extend the deal further into 2022 is supportive, given that it reduces the risk of the broader deal falling apart, and so minimizes the likelihood of a price war,” said analysts at ING, in a note.
That said, the surge in Covid-19 cases will continue to hit sentiment in the market, particularly as the delta variant, which was first noticed in India, has now made its way to the United States. It is now the cause of more than 80% of new U.S. Covid-19 cases, according to top U.S. infectious disease expert Anthony Fauci on Tuesday.
The Americas are facing a pandemic of the unvaccinated, the Pan American Health Organization said on Wednesday, as it warned that countries with low inoculation rates are seeing massive increases in cases.
On top of this, European Central Bank President Christine Lagarde warned earlier Thursday that the fresh wave of the pandemic could pose a risk to the Eurozone’s economic recovery. Also Bloomberg reported that China supplied oil from state-run inventories to the country’s largest refiners earlier this month in a bid to stifle the price rally.