Oil recovers from three-week low amid surge in Delta variant infections

Oil prices rose more than 1% on Tuesday, recouping some of the losses in the previous session when prices hit a three-week low, but gains are likely to be limited on worries that rising COVID-19 cases and restrictions in China will dent fuel demand.

Brent crude was up by 84 cents, or 1.2%, at $69.88 a barrel by 0656 GMT, after falling 2.3% on Monday. U.S. oil was up by 99 cents, or 1.5%, at $7.47 a barrel, having fallen by 2.6% in the previous session.

China on Tuesday reported more COVID-19 infections in the latest outbreak of the disease that was first detected in the country in late 2019, in what analysts said was the biggest test of Beijing’s zero-infection strategy.

Some cities in China, the world’s top crude oil importer, have stepped up mass testing as authorities try to stamp out locally transmitted infections of the highly transmissible Delta variant of the coronavirus.

“In the short-term oil market may be volatile with frequent pull-back as crude prices are beginning to struggle”, said Avtar Sandu, senior manager, commodities at Phillip Futures in Singapore, adding any deep pullback in prices is a buying opportunity.

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