Us crude hovered at 72.87 in Asia on Tuesday, falling back on Monday after hitting a high of 74.45 since October 2018, the biggest drop in a week. The surge in COVID-19 cases in Asia and Europe damped the rise in oil prices ahead of this week's OPEC+ meeting, and the market expects OPEC+ to make a decision to increase production at the upcoming meeting. According to a report by RBC Capital Markets, the OPEC+ meeting on Thursday is likely to announce an increase of 500000 to 1 million barrels per day in August, while the more contagious Delta variant has led to the re-imposition of the blockade in parts of Asia and Australia.

The road to recovery is still rugged, and demand may be affected by outbreaks of mutated strains. Louise Dickson, an oil market analyst at Rystad Energy, said that expectations of a recovery in oil demand this summer may be a little overestimated and traders had to face the fact this week that the Delta mutant spread to Europe and the surge in infection brought Southeast Asia and Australia back to the blockade. Given the possibility of an outbreak, we think OPEC+ should take a more cautious stance, with production in August increasing by only 100000-200000 b / d compared with the previous month.

If OPEC+ production remains stable, the global oil market will remain in short supply for the rest of the year, according to data to be evaluated by OPEC+ technical experts on Tuesday. The alliance, led by Saudi Arabia and Russia, is discussing resuming some of the suspended supplies in August as demand rebounds. Its joint technical committee will assess market conditions in preparation for the ministerial meeting on 1 July. Forecasts submitted to the Joint Technical Committee show a supply shortfall of about 1.7 million b / d in August and an average of 1.9 million b / d in the second half of the year, according to data seen by Bloomberg. The Committee will review and possibly confirm these projections. Although the forecast is slightly better than the one adopted by the committee last month, which forecast a shortfall of 1.9 million b / d in August, it still says there is room for OPEC+ to increase production; the alliance is widely expected to agree to increase supply at its meeting on Thursday, but the quantity remains uncertain. Analysts and traders surveyed by Bloomberg expect an increase of about 550000 barrels a day.

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