Oil steady as COVID return casts shadow over demand outlook

Oil steadied at the end of a volatile week in which the fast-spreading Delta virus variant continued to cloud the demand outlook.

West Texas Intermediate for September delivery traded down 11 cents at US$68.98/bbl on the New York Mercantile Exchange at 10:59 a.m. London time, after slipping 0.2 per cent on Thursday. Prices are up about one per cent this week.

Brent for October settlement was little changed at $71.30 on the ICE Futures Europe exchange, after dipping 0.2 per cent 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.

“This week has laid bare the contrasting views on the impact of the new wave of COVID caused by the Delta variant on the world’s appetite for oil,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd in London. “Consensus is a rare commodity.”

Delta has interrupted a rally that pushed oil prices more than 50 per cent higher in the first half of the year as major economies such as the U.S. got moving again. A critical concern is the flare-up in China, where authorities have taken an aggressive approach to containing the outbreak.

© 2021 Bloomberg L.P.

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