By Noah Rothstein

Crude oil futures rebounded on July 20 as market participants vied to take advantage of the two-month low oil hit in the previous session.

Monday’s selloff, spurred by demand destruction fears amid rising COVID-19 cases, pushed oil about 7% lower and hit other riskier assets. While equities avoided a new selloff on Tuesday, U.S. Treasury and German bond yields also slipped as investors remained worried.

“There are bottom pickers trying to get into this dip,” said Bob Yawger, director of energy futures at Mizuho in New York.

Brent crude rose 50 cents, or 0.7%, to $69.12 a barrel by 11:25 A.M. ET, sliding by 6.8% on Monday, July 19. The global benchmark fell from over $77 in early July, its highest since late 2018.

Tuesday is the final trading day for August U.S. crude futures, adding volatility to the market, Yawger said.

The expiring U.S. crude August contract was up 43 cents a barrel at $66.85 after earlier touching a session low of $65.21. The contract fell 7.5% on Monday. The next front month, September, was up 55 cents, or 0.8% at $66.90.

Still, the market remained skeptical that the price increase would last.

“As things stand, it is hard to see prices staging a comeback unless virus jitters are brought back under control,” said Stephen Brennock of oil broker PVM. “The market is clearly unsettled about the demand outlook.”

However, tight oil supply in the near term overshadowed coronavirus-related demand concerns. Crude inventories in the U.S. were expected to drop last week, its ninth weekly decline.

Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) expects global oil demand to grow by 6.6% in 2021. The cartel and its allies, known as OPEC+, agreed on Sunday to increase output from August, unwinding more of the supply curbs put in place when the pandemic struck last year.

In 2020, OPEC+ cut production by a record 10 million barrels per day (bpd) amid a pandemic-induced slump in demand and collapsing prices. It gradually reinstated some supply to leave it with a reduction of about 5.8 million bpd.

The group will increase supply by a further 2 million bpd or 0.4 million bpd a month from August until December 2021, OPEC said in a statement. It aims to fully phase out cuts around September 2022.

“Global demand still appears to be recovering dynamically, so the oil market should end up in supply deficit in the coming months despite the production hikes to be implemented by OPEC+,” said Eugen Weinberg of Commerzbank.