Oil Rises As Supply Tightness, Vaccinations Outweigh Virus Worries

Oil prices edged higher on Tuesday with investors placing their bets on tight supply and rising vaccination rates to offset any pandemic-borne impact on demand.

Brent crude futures gained 34 cents, or 0.46%, to $74.84 a barrel on Tuesday morning, extending a 0.5% gain on Monday. U.S. West Texas Intermediate (WTI) crude futures rose 20 cents, or 0.28%, to $72.11 a barrel, after losing 16 cents on Monday.

Benchmark prices rose despite the United States issuing travel warnings to Spain and Portugal due to rising COVID-19 cases reports that wider travel restrictions will not be lifted due to the highly infectious Delta variant and rising domestic infections.

In one encouraging sign for fuel demand, Britain reported its lowest daily total of new COVID-19 cases since July 4 on Monday, suggesting the recent surge in infections has passed its peak.

Analysts tracking mobility data remain confident about fuel demand, counting on vaccinations to guard against strict new lockdowns.

Global oil markets are expected to remain in deficit despite a decision by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, to increase production through the rest of the year.

Investors now await inventory data from the American Petroleum Institute industry group on Tuesday and the U.S. Energy Information Administration on Wednesday for further evidence that demand is holding up.