Crude oil prices witnessed some volatility during today's session, as concerns about the high the Delta coronavirus variant cases weighed on prices, but expectations of a decline in US crude oil inventories provided some support to crude.
Brent crude fell during the last hour by about two dollars from 72.88 dollars a barrel and is currently trading slightly above 71 dollars, and since the beginning of the year so far, Brent crude has risen by more than 40%. As for West Texas crude, it also fell by more than two dollars from the levels of 71 dollars and is trading slightly above the levels of 69 dollars per barrel.
Despite the recent volatility, oil prices are still relatively high, which has boosted the profits of the major oil companies, as most of these companies recorded strong profits in the second quarter of 2021.
Concerns about the spread of the delta variant in the United States and China, the largest oil consumers, have put pressure on prices.
In China, the spread of the virus has prompted the authorities to impose strict measures to control the outbreak.
Also, expectations of Iranian crude returning to the markets had a negative impact, with new Iranian President Ebrahim Raisi saying today that his government will take steps to lift the "authoritarian" sanctions imposed by the United States on the energy and banking sectors.
Iran and six powers have been in talks since April to revive the nuclear deal, but Iranian and Western officials have said significant gaps remain. The sixth round of indirect talks between Tehran and Washington was postponed on June 20, two days after Raisi was elected president. The parties involved in the negotiations have yet to announce when the talks will resume.
Meanwhile, a preliminary Reuters poll showed that inventories of US crude and products likely fell last week, with distillate and gasoline stocks expected to decline for the third week in a row.
Technically, the opportunity for prices to rise again is still available, for example, US Oil is trading slightly above the $69 levels, and is close to retest the support at $68.50, which represents the 61.8% Fibonacci retracement level of the last rise, and it is likely with staying above this level, we could see crude to resume its rise, prices will need to stabilize above the $74 levels to confirm the extension of the rise.
However, breaching the levels of 68.50 dollars may cause the decline to extend to the next support levels at 67 and then 65 dollars per barrel.