Oil falls due to delta variant that weighs on demand projections

Brent crude prices fell for a second day on Friday, although they remained above the threshold of $ 70 a barrel, after the International Energy Agency warned that growth in global oil demand is slowing dramatically due to the spread of COVID-19 variants.

Benchmark Brent crude futures were down 13 cents, or 0.21%, at $ 71.16 a barrel at 1120 GMT. US WTI oil futures were down 22 cents, or 0.32%, at $ 68.87 a barrel.

During the week, both reference contracts have a cumulative increase of at least 1%.

Oil demand growth stopped in July and will be discussed increasing at a slower pace for the remainder of 2021 due to rising infections with the delta variant of the coronavirus, the International Energy Agency (IEA) said on Thursday.

“The IEA’s sudden change in attitude has shaken our nerves and ended the oil rally, making us see the reality of the impact of the delta variant,” said Jeffrey Halley, OANDA Senior Market Analyst for Asia Pacific.

Banks have also lowered their forecasts for oil demand in the short term.

“Now we see that the recovery in global demand will stagnate this month, as crude consumption will only hit 98.3 million barrels per day (bpd) in August and an average of 97.9 million bpd in September, on par with the average of nearly 98 million bpd in July,” consulting firm JPM Commodities Research said in a report.

Similarly, Goldman Sachs lowered its estimate of the global oil deficit to 1 million bpd from 2.3 million bpd in the short term, citing an expected decline in demand in August and September.

In stark contrast, the Organization of the Petroleum Exporting Countries (OPEC) on Thursday maintained its forecasts for a rebound in global oil demand this year and further growth in 2022, despite concerns about COVID-19 outbreaks and mutations.