WTI hangs in the balance of OPEC and COVID concerns

The price of oil is lower by 0.70% into the close on Wall Street with WTI falling from a high of $74.90 to a low of $73.19.

The concerns about spreading COVID-19 variants are derailing the prospects of the global economic recovery.

Global leaders, such as the UK's Boris Johnson, have warned that ''this pandemic is not over,'' despite the vaccines that are reported to be highly effective against the Delta variant.

Instead, there are concerns that a virus surge is possible as warned by finance chiefs of the G20 said over the weekend, pressuring price in the open on Monday. 

In the lead-up, both benchmarks, WTI & Brent, shed around 1% last week, sinking further away from levels last since back in October 2018.

Asia, as a swing demand centre for the energy market, is a major focus of concern in this respect. 

Tokyo has reimposed pandemic-related restrictions less than two weeks before the city hosts the Summer Olympic Games.

Meanwhile, the Organization of the Petroleum Exporting Countries and their allies, a group known as OPEC+, were unable to conclude output talks last week which raises the longer-term prospect of producers abandoning the deal altogether.

The consequently supply risk is also a weight going forward.

''As long as the OPEC impasse keeps the status-quo production agreement in place, a more aggressive tightening is expected for the near-term, which could lead to a temporary and significantly larger-than-anticipated deficit, which should fuel higher prices for the time being,'' analysts at TD Securities said.

On the flip side, helping to limit oil price losses, stockpiles in the biggest crude producing nation have tightened further, with US inventories falling to the lowest since February 2020 in the week to July 2.