Oil Extends Two-Day Rally as Demand Weathers Latest Virus Wave

Oil extended gains after its biggest two-day advance since November, as fuel demand broadly withstands the latest wave of the virus in Asia.

Brent futures climbed further above $71 a barrel on Wednesday after rallying 9% during the previous two sessions. Top crude importer China has brought its latest virus outbreak under control, though Covid-19 continues to make its presence felt in other big oil consumers, with Japan announcing an expansion of its state of emergency.

Oil has had a volatile August so far. The stellar year-to-date rally cooled in the first half of the month as concerns grew thathe virus’s delta variant would hit consumption, while the Federal Reserve flagged plans to taper stimulus measures. Since then prices have recovered, with banks from Goldman Sachs Group Inc. to UBS Group AG underlining bullish calls on the market.

“Now that Brent has reclaimed the $70 handle, the question is whether or not it can continue to go higher,” said Stephen Brennock, an analyst at brokerage PVM Oil Associates. “The blistering rally seen so far this week is unlikely to be maintained,” as Covid-19 outbreaks continue.