Oil Steadies After Surging Above $65 With Broader Market Rally

Oil steadied on Tuesday after jumping more than 5% amid a global rebound in equities and commodities following the worst losing streak for crude since October 2019.

Futures in New York traded near $65 a barrel after advancing on Monday for the first time in eight sessions. The fast-spreading delta variant of the virus is continuing to cloud the economic outlook, but there are a few positive signs for demand. China has brought local cases down to zero, while Southeast Asia’s biggest economy — Indonesia — has lifted some restrictions.

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The Covid-19 resurgence has interrupted oil’s rally and may prompt OPEC+ to reassess its plans to return additional barrels to the market each month until all of its halted output halted is revived. Goldman Sachs Group Inc (NYSE:GS)., however, reiterated that the impact from delta would be transient.

The futures curve has weakened amid the flare-up. The prompt timespread for Brent was 40 cents in backwardation — a bullish structure where near-dated contracts are more expensive than later-dated ones. That compares with 92 cents at the end of July.

Chinese airlines plan to operate the fewest flights in August since February, according to data from Cirium, following the latest virus outbreak. In Malaysia, infections are rising and threatening to aggravate shortages of semiconductors and other components that have hammered automakers for months.