Oil fell for a second day as the spread of the delta coronavirus variant, including in the key market of China, continues to pose a risk to demand.
West Texas Intermediate futures dropped 1.7%, after slumping by the most in two weeks on Monday. China’s outbreak spread further with additional infections in areas including Wuhan, where the pandemic first emerged. Residents in Beijing were advised not the leave the capital, and flights are being canceled. Some cities and townships have been sealed by local authorities.
Crude rallied strongly in the first half of the year as the rollout of vaccines allowed major economies to reopen, boosting oil demand and draining the glut built up during the initial wave of the pandemic. The pace of gains slowed in July as delta began to pose a greater challenge, and kept any price increases in check.
“We are seeing probably a slight muting of demand globally, but I’m talking about a very slight muting of demand at this time,” BP Plc Chief Executive Office Bernard Looney said.
In China, the pathogen has breached some of the strictest virus defenses in the world. Authorities reported 61 confirmed cases and 23 asymptomatic infections on Tuesday. Thailand is reporting more cases and Indonesia, the biggest gasoline importer in Asia, has extended restrictions in some regions until Aug. 9.