By Gina Lee
Investing.com – Oil was up Tuesday morning in Asia, clawing back some of Monday’s losses as investors went bargain-hunting over expectations that supply will not increase anytime soon. However, gains were capped due to the ever-increasing number of COVID-19 cases that weakened the fuel demand outlook.
Brent oil futures inched up 0.06% to $69.55 by 12:56 AM ET (4:56 AM GMT) and WTI futures inched up 0.06% to $67.09.
The Organization of the Petroleum Exporting Countries and allies (OPEC+) reportedly believes that its planned supply increase is sufficient for the short term, even as the U.S. continues to exert pressure on the cartel to increase supplies and keep prices under control.
Some investors remained optimistic.
"WTI futures have a support at around $65 and investors tend to look for bargains whenever the benchmark gets closer to that level as we saw on Monday and last week," Fujitomi Securities Co Ltd. analyst Toshitaka Tazawa told Reuters.
The market dismissed the rising output in U.S. shale oil, he added. This output is expected to rise to 8.1 million barrels per day (bpd) in September, the highest since May 2020, the Energy Information Administration's monthly drilling productivity report said on Monday.
"But any gains in oil prices will likely be limited as a spike in COVID-19 Delta variant infections worldwide fueled concerns over slowing global fuel demand," said Tazawa.
Investors are also worried about weaker fuel demand in China, the top oil importer globally. The country’s daily crude processing in July fell to the lowest since May 2020 as independent plants decreased production due to tighter quotas, high inventories and weakening profits.
China’s industrial production and retail sales also grew slower than expected in July, according to data released on Monday. The disappointing data added to fuel demand concerns in the world’s top oil importer.
Investors now await U.S. crude oil data from the American Petroleum Institute, due later in the day.