Crude oil futures steady as pandemic concerns remain at the forefront

0332 GMT: Crude oil futures were steady during mid-morning trade in Asia Aug. 6, as the spread of the delta variant of the coronavirus in key oil-consuming economies continued to limit the market's upside and as participants await the upcoming US nonfarm payrolls data to gauge the country's economic conditions.

At 11:32 am Singapore time (0332 GMT), the ICE October Brent futures contract was up 14 cents/b (0.2%) from the previous close at $71.48/b, while the NYMEX September light sweet crude contract rose 12 cents/b (0.17%) at $69.21/b.

The front month Brent and NYMEX light sweet crude markers had settled 1.29% and 1.38% higher on Aug. 5, rising in tandem with the broader financial markets on risk-on sentiment following the release of a positive weekly unemployment claims report from the US Labor Department.

The oil rally, however, fizzled during this morning's Asian trading session, as investors remained concerned over the economic fallout from the region's battle against the pandemic.

The market has been especially anxious over the situation in China, where previously successful efforts to contain the pandemic had been thwarted by the spread of the more transmissible delta variant of the coronavirus.

"Oil has been under pressure this week as moves to reinstate travel restrictions in China reflected the situation across Asia. At least 46 cities have advised against travelling, and authorities have suspended flights and stopped public transport," ANZ analysts said in an Aug. 6 note.

Nervousness over the surge in the delta-driven COVID-19 infection numbers in the west, including in the US and major European economies, has also put a cap on oil prices.

According to estimates by the US Centers for Disease Control, the delta variant of the coronavirus accounts for more than 90% of new infections reported in the US. The seven-day average of COVID-19 infections in the country has risen nearly 400% since the beginning of July to 96,036 as of Aug.4, according to data from the New York Times.

The market nevertheless remains optimistic that oil demand in the US, and in the west, will defy the rise in COVID-19 cases, as higher vaccination rates may preclude the need for lockdown measures.

The market is now awaiting the US nonfarm payrolls report, due to be released later Aug. 6, for further insight into the country's economic recovery.

A strong reading could bring back chatter of tapering from the US Federal Reserve, steepening the US Treasuries yield curve and triggering an appreciation of the dollar. A stronger dollar will weigh on sentiment for crude futures.