Oil was volatile on Tuesday, swinging between positive and negative territory as concern over rising cases of the Delta coronavirus variant weighed on prices, but expectation of a decline in US inventories lent some support.
Brent, the international benchmark for oil prices, was down $1.04, or 1.4 percent, at $71.85 a barrel by 1236 GMT.
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US West Texas Intermediate (WTI) crude was down $1.21, or 1.7 percent, at $70.05 a barrel.
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Both contracts had risen more than 60 cents earlier in the session.
“The oil market continues to alternate between concerns about tight supply on the one hand and about looming demand outages on the other,” said analysts at Commerzbank.
Despite recent fluctuations, oil prices remain relatively high, lifting earnings of major oil firms.
BP, Conocophillips, Diamondback Energy Inc, and Continental Resources Inc all reported strong second-quarter earnings this week.
Brent has risen more than 40 percent since the beginning of the year.
Concerns over the spread of Delta variant in the United States, and China, the top oil consumers, put pressure on prices.
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 had a negative impact.
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 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.
Meanwhile, 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.
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