Oil steadies but set to slump for the week on Delta Covid Issues

Oil prices came off three-month lows on Friday but were on track for a weekly decline of around 6% as new lockdowns in countries with low vaccination rates facing surging cases of the Delta variant dimmed the outlook for fuel demand.

Broader investor risk aversion also weighed on oil with the U.S. dollar jumping to a nine-month high on signs the U.S. Federal Reserve is considering reducing stimulus this year.

U.S. West Texas Intermediate (WTI) crude futures for September, due to expire on Friday, rose 35 cents or 0.5% to $64.04 a barrel at 0115 GMT after sliding 2.7% on Thursday. The more active October contract rose 33 cents or 0.5% to $63.83.

Brent crude futures rose 27 cents or 0.4% to $66.72 a barrel after dropping 2.6% on Thursday to its lowest close since May.

”With vaccination levels relatively low, the deteriorating situation across Asia has already seen mobility fall,” ANZ commodity analysts said in a note.

”This will lead to a fall in crude oil demand in the region in the second half of the year. This is taking the shine off an otherwise positive backdrop elsewhere.”

China has imposed new restrictions with its ”zero tolerance” coronavirus policy, affecting shipping and global supply chains, and the United States and China have imposed tit-for-tat flight capacity restrictions.

Meanwhile Delta variant outbreaks in Australia and New Zealand have sparked strict lockdowns.

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