Oil prices stabilised on Tuesday after slumping around 7 per cent in the previous session amid a broader market retreat led by concerns about a resurgence of COVID-19 infections, which came just as producers inked a new supply deal.

Brent crude gained 38 cents, or 0.6 per cent, to $69.00 a barrel by 0058 GMT. The US crude contract for August delivery, which expires later on Tuesday, was up 49 cents, or 0.7 per cent, at $66.91 a barrel. US crude for September delivery was up around 1 per cent at $66.99 a barrel.

The sell off, which pushed prices to their lowest in two months, "was largely due to concerns centered on the Delta variant and macro backdrop rather than a significant re-think of forward looking oil fundamentals," RBC Capital Markets said in a note.

It came after the Organization of the Petroleum Exporting Countries (OPEC) and allies, called OPEC+, reached a compromise on Sunday to increase output, but that was more "an unfortunate coincidence rather than a catalyst," RBC said, noting equities fell sharply and bonds rose.

That Delta variant of COVID-19, which is significantly more contagious than earlier ones, is now the dominant strain worldwide, US officials said on Friday.

It has been detected in about 100 countries around the world and patchy rollouts of inoculation programmes in many countries are undermining the battle against the virus, raising the prospect of more lockdowns that would hit demand for oil products.

Still, RBC said high frequency indicators showed that restaurant bookings over the weekend in the United States, the world's biggest oil consumer, were at pre-COVID levels, while domestic flights were at the highest level since the pandemic started.

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