Delta Variant Drop in Oil
Oil continued its losses as rising coronavirus cases raised concerns about demand.
Futures in New York slipped 0.2% after falling back below $73 a barrel on Monday. With the emergence of the more contagious delta variant, the number of cases increased in the U.K., while restrictions and quarantines were reinstated in certain regions.
The U.K. on Monday announced the highest number of Covid-19 cases since January, while Hong Kong, Spain, and Portugal began to impose new restrictions on visitors. Authorities are also racing to contain outbreaks in Australia. The virus flare-up may lead to export-focused refiners in Asia trimming processing rates.
In addition, OPEC+, which will meet on Thursday, plans to increase production by 550 thousand barrels. But this is only a quarter of the global deficit announced by OPEC+.
“Oil prices are trimming back because of rising concerns about the spread of the Covid-19 Delta variant,” said Victor Shum, vice president of energy consulting at IHS Markit. However, demand is spiking, driven by countries including the U.S., China, and the Middle East, he added.
West Texas Oil for August delivery fell 0.5 % to $72.54 a barrel on the Nymex market.
Brent oil for August delivery fell another 0.6 % to $74.27 a barrel on the London ICE Futures Europe market after falling 2 % on Monday.
U.S. Expects Stable Relationship With Russia
U.S. Secretary of State Antony Blinken said they hoped to develop stable and fruitful relations with Russia. On the other hand, he told the Italian newspaper La Repubblica that if Russia’s aggressive activities continue, the US will give the necessary response.
“If Russia continues to attack us, or to act as it did with the SolarWind attacks, the intrusions into our elections, and the aggression against Navalny, then we will respond,” he told Italian daily La Repubblica.
The U.S. Secretary of State referred to the cyberattack and the Kremlin opponent, Navalny.
To be noted, U.S. Secretary of State Antony Blinken met with Russian Foreign Minister Sergei Lavrov last Wednesday night in Iceland. This meeting takes place within the ministerial session of the Arctic Council in Reykjavik.
The summit between Blinken and Lavrov is the first between the heads of Russian and American diplomacy.
However, despite differences on issues such as Ukraine, Lavrov informed reporters after the meeting that the talks had been “constructive.” U.S. authorities agreed with the Russian minister, calling it “a good start” that allowed “addressing many issues.”
There were also US-China relations in the headlines. Blinken said that China is the “most complex” country in terms of relations, but that the United States would not want any country to choose between the two countries.
“It is, however, true that when we deal with China – as an opponent, a rival, or a partner – we are much more effective if we act together,” he added.
Unemployment Rises in Japan
Unemployment and retail sales rose above expectations in May in Japan.
The unemployment rate in Japan rose to 3% in May. However, the unemployment rate, which was 2.8% in April, was expected to be 2.9% in May.
According to the Ministry of Internal Affairs and Communications data, the number of people unemployed in Japan in the fifth month of 2021 was 2.11 million people, representing a year-on-year increase of 130,000 people. Compared to the previous month, the number of unemployed people increased by 20,000 people.
According to the Japanese Ministry of Labor data, the job/application ratio was 1.09 in May, above the expectations of 1.08. This rate was 1.09 in April.
In his assessment, Government Spokesperson Katsunobu Kato stated that the Japanese labor market has weakened due to the impact of the Covid-19 outbreak and emphasized that the situation should be followed.
Retail sales in Japan grew for the third consecutive month on an annual basis in May 2021, even as unemployment in the country hit a five-month high.
Retail sales in May rose 8.2% compared to the same period last year. Economists had expected retail sales to rise to 7.9%.