Oil held losses below $69 a barrel as investors assessed a demand outlook still clouded by the Covid-19 resurgence in many regions.

Futures in New York lost around 1% from Friday’s close after not settling Monday due to a U.S. holiday. The fast-spreading delta variant of the virus has led to renewed restrictions on mobility in some areas, although there are signs of recovery emerging. Chinese trade data for August are due Tuesday, giving an indication of the economic health of the world’s biggest oil importer.

The market opened weaker on Monday after Saudi Arabia cut prices of its crude to Asia next month by more-than-expected, catching traders by surprise and raising concerns about the short-term demand picture.

Oil’s rally has run into stiff headwinds over the past couple of months after prices surged more than 50% over the first half of the year. While delta has crimped demand, there are expectations that the market will tighten over the rest of 2021. OPEC+ is betting that the recovery will accelerate, agreeing last week to keep boosting supply each month. 

The prompt timespread for Brent was 60 cents a barrel in backwardation -- a bullish structure where near-dated contracts are more expensive than later-dated ones -- on Monday. That compares with $1.18 a week earlier.

 

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