Oil in Asia was lower on Friday morning but recorded solid gains at the end of the week and month. Fuel demand is growing faster than supply, while vaccination rates have mitigated the impact of the renaissance on Govt-19 cases worldwide.
Brent oil futures were down 0.79% at $ 74.51 after rising 1.75% on Thursday. The WTI futures fell 0.736 to .07.06, up 1.7%.
Brent and WTI futures are set for a weekly profit margin of about 2%, based on signs of tight raw materials and strong fuel demand in the U.S., the world’s largest oil consumer. Both the U.S. Petroleum Corporation and the U.S. Energy Information Administration have announced a draw in U.S. crude oil supplies, with crude shares in Cushing declining the most since January 2020.
U.S. Jet fuel consumption has also reached its highest level since March 2020, according to ANZ analysts.
“We have been getting strong prices for a while now because this is the basic supply-demand issue we need to meet in places like the United States,” Justin Smirk, a senior economist at Westbank, told Reuters.
Investors are concerned about the rising number of COVID-19 cases involving delta variants of the virus in the US, Asia, and some parts of Europe.
However, some said that rising COVID-19 vaccination rates could reduce the need for drastic control measures that contributed to the decline in demand by 2020.
“I think the risks of the big strikes we’ve seen in 2020 are very low,” Smirk said.
Following the increase in COVID-19 cases in the country earlier in 2021, Indian petrol consumption and industrial production also registered a rapid improvement.
“Yes, the Covid-19 delta variant is a risk, but is it going to stifle demand growth in the second half? We may lose it,” Vivek Thar, a commodities analyst at Commonwealth Bank, told Reuters.
Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC +) will begin raising supplies by 400,000 barrels a day from August. This increase will continue until all OPEC + production is stopped.