By William Watts
Oil futures ended higher Thursday, snapping a three-day losing streak tied in part to worries that the spread of the delta variant of the coronavirus that causes COVID-19 may impact energy demand.
West Texas Intermediate crude for September delivery (NYM:CL00) gained 94 cents, or 1.4%, to finish at $69.09 a barrel on the New York Mercantile Exchange. October Brent crude , the global benchmark, rose 91 cents, or 1.3%, to close at $71.29 a barrel on ICE Futures Europe. WTI is nursing a week-to-date loss of more than 6%, while Brent is off 5.4%.
The buy-the-dip approach remains a force in the oil market, analysts said.
The bounce showed “crude oil bottom pickers stepping into the void today and pushing the barrel higher,” said Robert Yawger, executive director of energy futures at Mizuho Securities. “That auto reaction to crude-oil pullbacks had largely been working since the vaccine announcement on Nov. 2.”
Recent weakness has been tied to concerns around surging cases of COVID-19 around the world tied to the delta variant, said Robbie Fraser, global research and analytics manager at Schneider Electric.
“While demand levels have generally improved quicker than expected over the past year, record numbers of new cases in many countries threaten to halt or even unwind some of that progress in the weeks ahead,” he said, in a note.
Crude slumped on Wednesday after an unexpected uptick in U.S. crude stockpiles, although gasoline inventories showed a much larger-than-expected drop. A stronger dollar also weighed on crude. The dollar backed off Thursday, with the ICE U.S. Dollar Index (IFUS:DXY) , a measure of the currency against a basket of six major rivals, off 0.1%.
The build in U.S. crude stocks was largely attributed to a fall in exports.
Natural-gas futures ended lower after the Energy Information Administration said a net 13 billion cubic feet of the fuel was injected into storage last week. The September contract fell 0.4% to cloe at $4.14 per million British thermal units. It remains up nearly 6% for the week, boosted by hot weather and strong global demand.
September gasoline rose 2% to close at $2.294 a gallon, while September heating oil was finished 1.5% higher at $2.106 a gallon.