Oil holds near eight-week low after selloff on delta variant concern

Brent oil steadied after a coronavirus-driven washout on Monday that saw prices tumble to an eight-week low.
 

Futures in London held near $69 a barrel after plunging 6.8% on Monday amid a broader market rout. The fast-spreading delta variant of Covid-19 has led to a surge in virus cases and renewed restrictions as it sweeps the globe, raising the prospect of a prolonged hit to oil consumption.
 

Oil’s upward trajectory has reversed in July, with the latest virus waves demonstrating the uneven nature of the economic recovery. Goldman Sachs Group Inc. said the delta variant may curb global oil demand by 1 million barrels a day for a couple of months, though that’s offset by a slow production ramp-up from OPEC+. However, not all analysts are as optimistic about the outlook for prices.
 

“The market has yet to adjust to the idea that the end of the pandemic might not be a clear binary event and it might not be soon,” said Paul Horsnell, head of commodities research at Standard Chartered, adding that oil may have moved through the biggest period of supply tightness. “We believe we may be moving into a situation where economic decisions and the mobility possibilities open to consumers are still affected by the pandemic and remain so for an extended period.”
 

Signs of delta’s continued impact on energy abound. The US has warned citizens to not travel to the UK and Indonesia amid an increase in infections there. 
 

Crude’s plunge also put the global benchmark under technical pressure. Brent fell below its 100-day moving average for the first time since November, and below its 50-day moving average for the first time since May. Such moves can spark additional selling.