Oil Prices Stabilize as Covid Concerns Build

Oil prices fell on Thursday after the International Energy Agency (IEA) said the spread of the Covid-19 Delta variant would slow the recovery of global oil demand. Brent futures fell 13¢ to settle at $71.31 per barrel on Thursday after hitting a session high of $71.90/bbl. US benchmark West Texas Intermediate (WTI) fell 16¢ to settle at $69.09/bbl. The international energy watchdog's monthly report said rising oil demand reversed course in July and was set to grow more slowly for the rest of the year after the latest wave of Covid-19 infections prompted countries to bring in restrictions again (IOD Aug.12'21). "Growth for the second half of 2021 has been downgraded more sharply, as new Covid-19 restrictions imposed in several major oil-consuming countries, particularly in Asia, look set to reduce mobility and oil use," the Paris-based IEA said. "We now estimate that demand fell in July as the rapid spread of the Covid-19 Delta variant undermined deliveries in China, Indonesia and other parts of Asia." The IEA put the demand slump last month at 120,000 barrels per day and predicted growth would be 500,000 b/d lower in the second half of the year than it had estimated last month, noting some changes were due to revisions in data. "The IEA report seemed to suggest we'd see demand weaken a bit because of the Covid flare-up and because that will reduce the odds of a so-called super-cycle in oil," said Phil Flynn, a senior analyst at Price Futures Group in Chicago. Opec Optimism In its monthly report that also came out on Thursday, Opec stuck to its prediction of a strong recovery in world oil demand in 2021 and 2022, despite concerns about the spread of the virus. That came a day after the US urged Opec and its allies to boost oil output to tackle rising gasoline prices, which it sees as a threat to the global economic recovery (OD Aug.11'21). Opec agreed in July to boost output each month by 400,000 b/d versus the previous month starting in August, until the rest of their record cuts of 10 million b/d, about 10% of world demand, are phased out (OD Jul.19'21). Reuters