Oil prices rose on Tuesday on expectation of a further decline in US oil inventories, recouping some losses from the previous session due to lingering concern over rising cases of the Delta coronavirus variant.
Brent crude, the international benchmark for oil prices, was $0.29, or 0.4%, higher at $73.18 a barrel, by 1111 GMT. US West Texas Intermediate (WTI) crude was up $0.28, or 0.4%, at $71.54 a barrel.
Both markets dropped more than 3% on Monday.
“Some market participants see Monday’s price setback as a bit exaggerated, considering that we are likely to see another decline in oil inventory this week,” UBS analyst Giovanni Staunovo said.
A preliminary Reuters’ poll showed US crude and product inventories likely declined last week with both distillates and gasoline stockpiles predicted to have fallen for a third straight week.
Despite recent fluctuations, oil prices are high and healthy, lifting earnings of major oil firms. BP Conocophillips, Diamondback Energy Inc and Continental Resources reported strong second-quarter profit this week.
Brent has risen more than 40% since the beginning of the year.
However, concerns over the spread of Delta variant in the United States and China, the top oil consumers, kept a lid on the gains.
In China, the spread of the variant from the coast to inland cities has prompted authorities to impose strict measures to bring the outbreak under control.
“Delta-related concerns will likely keep oil markets volatile over the coming weeks but at the same time we also see flying activity across Europe and the US continue to grind higher, supporting oil demand,” Staunovo said.
Expectations of a return of Iranian crude to the markets also limited the upside for prices.
Iran’s new president, Ebrahim Raisi, said on Tuesday his government would take steps to lift “tyrannical” sanctions imposed by the United States on its energy and banking sectors.
Iran and six powers have been in talks since April to revive a nuclear pact. But Iranian and Western officials have said that significant gaps remain.
The sixth round of indirect talks between Tehran and Washington adjourned on June 20, two days after Raisi was elected president. Parties involved in the negotiations have yet to announce when the talks will resume.