Oil prices eased on Friday as concerns remain about the irregular spread of COVID-19 vaccines around the world, despite increasing optimism about a recovery in fuel demand.
Brent crude fell 13 cents, or 0.2%, to $71.18 as of 0504 GMT, after falling 4 cents on Thursday after the biggest gain since May 2019. The contract is on track to gain over 2% this week.
West Texas Intermediate (WTI) oil was down 10 cents, or 0.2%, to $68.71, after gaining nearly 4% this week, down 2 cents in the previous session.
The upside momentum has stalled, leading to some profits. However, the pullback is very likely to be modest, as faith in a strong US economic and oil demand recovery is firmly established.
Amid optimism that global fuel demand, in which vaccines work significantly, is recovering from the depths of the pandemic, both contracts have increased by nearly $5 over the past two weeks.
America and Europe are well ahead in immunization efforts, but the progress in vaccination and struggle in developed and developing Asian countries is quite slow. This means that social distancing restrictions in the region have not been clearly resolved in sight.
Although the second year of the century’s worst global health crisis, with more than 170 million people infected and nearly 3.8 million killed worldwide, is coming to an end soon, the COVID-19 and its variants epidemic shows no signs of ending.
Prices rose earlier this week as the Organization of the Petroleum Exporting Countries (OPEC) and its allies predicted that demand will exceed supply in the second half of 2021. OPEC+ agreed on Tuesday to maintain supply restrictions until July
The slow pace of the Iranian nuclear talks is providing an area of relief so that Iranian oil, which will return to the market if a deal is reached, does not quickly catch up with demand.
But the slow spread of vaccines and high infection numbers in countries like Brazil and India are raising concerns over the prospect of demand in the world’s fast-growing markets for crude oil and refined products.
Meanwhile, US crude inventories fell more than forecast last week despite rising fuel inventories. This shows that the demand for final products is not matched by refinery production.
After digesting the news and data on the weekly EIA, OPEC+, and Iran fronts, the market will likely return to watching broad equity trades in the financial markets. The next focus for this will be the US May employment data.
