Oil prices were on track to lose more than 5% weekly as new quarantines hurting the fuel demand outlook in countries facing rising cases of the COVID-19 Delta variant. Prices remained stable on Friday, moving away from three-month lows.
It is putting pressure on oil prices as the US dollar jumped to a nine-month high on signs that the Federal Reserve is considering reducing stimulus this year.
Brent and WTI are on their way down more than 5% weekly.
Brent crude futures rose 24 cents or 0.4% to $66.69 a barrel at 0635 GMT, after dropping 2.6% on Thursday to its lowest close since May.
West Texas Intermediate (WTI) crude futures for September, due to expire on Friday, rose 38 cents or 0.6% to $64.07 a barrel, after sliding 2.7% on Thursday. The more active October contract was up 26 cents at $63.76 per barrel.
Increasing restrictions on mobility created by the COVID-19 Delta variant are raising concerns for oil demand and discouraging investors. Delta’s spread amid moderate economic growth and tighter monetary policy prospects creates short-term fluctuations in the commodity market.
Recent lockdowns in major economies around the world are likely to hurt economic activity and growth forecasts for the coming months.
Japan has extended its emergency quarantine. Cases have been confirmed to increase in countries whose industries need oil and will also be affected by the Delta variant, such as South Korea, Malaysia, the Philippines, Vietnam and Thailand. Outbreaks in Australia and New Zealand have also led to strict quarantines.
China has imposed new restrictions with its “zero tolerance” coronavirus policy affecting shipping and global supply chains. The United States and China have imposed flight capacity restrictions.
The summer season, which is the season of highest gasoline consumption in the USA, the world’s largest consumer, is approaching the end. The end of the summer holidays in Europe and the United States will also reduce oil demand.
Aviation remains the weakest component of global demand, and the risk of further restrictions on domestic and international travel due to the Delta variant will play a major role in the remainder of the year.
