Oil Down as Covid Concerns Hang Over Market
(Bloomberg) -- Oil declined -- paring a modest weekly gain -- as the fast-spreading delta virus variant continued to cloud the demand outlook.
Futures in New York dropped below $69 a barrel after slipping on Thursday. The latest Covid-19 wave is leading to tighter curbs on movement across the globe, although there are mixed assessments on its impact. The International Energy Agency reduced its demand forecasts for the rest of the year, while Goldman Sachs Group Inc. predicts only a transient hit to consumption.
Delta has interrupted oil’s rally after a rapid rebound from the pandemic in big economies such as the U.S. helped drive prices more than 50% higher over the first half of the year. The biggest concern is the flare-up in China, where authorities have taken an aggressive approach to containing the outbreak despite having one of the world’s highest vaccination rates.
“The oil market will likely continue to maintain a nervous watch, especially for a deterioration in China and the U.S.,” said Vandana Hari, founder of energy consultant Vanda Insights. “Yesterday’s IEA report validated fears over a slowdown in second-half demand due to the delta wave.”
Prices |
|
Oil’s market structure has also weakened. Brent’s prompt timespread was 40 cents in backwardation -- a bullish signal where near-dated contracts are more expensive than later ones. That compares with 92 cents at the end of July.
Global oil demand “abruptly reversed course” last month, falling slightly after surging by 3.8 million barrels a day in June, the IEA said in its monthly market report on Thursday. The drop in consumption comes as OPEC+ hikes output with a goal to steadily revive all of the production halted during the pandemic.
While China and parts of Southeast Asia are seeing a hit to consumption from the virus restrictions, at least one Indian refiner is ramping up crude processing as demand climbs after a devastating wave earlier this year.
© 2021 Bloomberg L.P.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Falcon Oil Declares Commercial Flow Test Results for Shenandoah Well
- Macquarie Strategists Expect Brent Oil Price to Grind Higher
- Japan Failing to Meet Corporate Demand for Clean Power: Amazon
- Pennsylvania County Joins List of Local Govts Suing Big Oil over Climate
- UK Oil Regulator Publishes New Emissions Reduction Plan
- PetroChina Posts Higher Annual Profit on Higher Production
- US, SKorea Launch Task Force to Stop Illicit Refined Oil Flows into NKorea
- McDermott Settles Reficar Dispute
- Russian Navy Enters Warship-Crowded Red Sea Amid Houthi Attacks
- USA Commercial Crude Oil Inventories Increase
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Oil Demand Outpaces Expectations, Testing Calculus on Peak Crude
- House Passes Protecting American Energy Production Act
- TotalEnergies Restarts Production in Denmark's Biggest Gas Field
- USA Oil and Gas Job Figures Jump
- Republican Lawmakers Say IEA Has Abandoned Energy Security Mission
- Blockchain Demands Attention in Oil and Gas
- Houthis Warn Saudi Arabia of Retaliation If It Backs USA Attacks
- Macquarie Sees USA Oil Production Exiting 2024 at 14MM Barrels Per Day
- Summer Pump Prices Set to Hit $4 a Gallon Just as Americans Hit the Road
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Chinese Mega Company Makes Major Oilfield Discovery
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Another Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Vessel Sinks in Red Sea After Missile Strike
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Equinor Makes Discovery in North Sea
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension