Oil Heads for Longest Run of Losses Since March

(Bloomberg) -- Oil fell for a fourth day, heading for the longest losing run since March, on the threat to demand from the delta coronavirus variant.

Brent declined 0.5% after losing almost 3% over the previous three sessions. U.S. gasoline consumption fell for a third week, according to a survey by Descartes Labs, while official data from China on Monday revealed a slowdown in July. Oil’s initial gains in the session were overturned as a strengthening dollar made commodities priced in the currency more expensive.

After a blistering rally in the first half, crude’s advance has been checked in July and August. The delta variant has spurred fresh curbs on mobility in many nations including China, harming energy consumption. Against that backdrop, JPMorgan Chase & Co. has been among bank’s reducing oil price forecasts.

“These periodic corrections are likely to be short-lived and the longer-term trend will still be a move higher,” said John Driscoll, chief strategist at JTD Energy Services Pte. “Signals point to a recovery. Demand is likely to rebound unless these new virus variants result in massive lockdowns.”

While demand has been challenged, the Organization of Petroleum Exporting Countries and its allies including Russia have stayed the course in relaxing the output curbs imposed in the early phase of the pandemic. Daily supplies will rise by 400,000 barrels a day this month. The group’s next regular meeting is set for Sept. 1, and follows a call from U.S. President Joe Biden earlier this month for the cartel to restore more production to bring gasoline prices down.

Crude’s decline on Monday reflected concerns over the impact of delta on demand, according to Goldman Sachs Group Inc. Still, that challenge would be transient and the bank said it was standing by a forecast for Brent to hit $80 a barrel next quarter amid a sustained deficit, according to an Aug. 16 note.

Brent’s prompt timespread was 37 cents a barrel in backwardation. While that’s a bullish pattern -- with near-dated prices above those further out -- it is down from 62 cents about a month ago.

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