Oil heads for weekly gain as tighter supplies offset virus fears

Oil headed for a second weekly gain as signs of tighter supplies helped assuage fears over the resurgent pandemic’s threat to demand.

Futures held above $73 a barrel in New York, up 1.9 per cent this week even as some countries renewed curbs on movement amid a spike in COVID-19, most notably in Southeast Asia. Prices were supported by a further plunge in U.S. crude inventories – the ninth in 10 weeks – and signals that the Federal Reserve will continue measures to support the economy.

There’s confidence the oil market will continue to strengthen, with Royal Dutch Shell plc chief Ben van Beurden predicting “a strong recovery in demand” as economic activity picks up again.

With prices ending the month little changed, crude’s gains since the start of the year stand at more than 50%. Other commodities have hit their highest levels in a decade.

“Despite the numbers of new cases remaining at a high level, the oil market no longer appears to be viewing the issue of the delta variant with quite the same alarm as it was at the beginning of last week,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “The oil market has learnt to live with the virus.”

Prices

  • West Texas Intermediate for September delivery lost 0.3 per cent to $73.43 a barrel on the New York Mercantile Exchange at 10:09 a.m. London time, after climbing 1.7 per cent on Thursday.
  • Prices are up 1.9 per cent this week.
  • Brent for September, which expires Friday, slipped 0.2% to $75.91 on the ICE Futures Europe exchange, after rising 1.8 per cent on Thursday.
  • The grade is up one per cent in July, a fourth monthly increase.
  • Its prompt timespread was 97 cents in backwardation.

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