By Adedapo Adesanya
Oil prices fell on Friday, extending losses from the previous two sessions, recording the biggest weekly drop since March after expectations of more supply put pressure on the market.
The Brent crude dropped 0.16 per cent or 12 cents to trade at $73.59 per barrel, while the West Texas Intermediate (WTI) lost 0.22 per cent or 16 cents to settle at $71.81 per barrel.
This means Brent has fallen almost 3 per cent for the week, marking a decline for the third week in a row for the first time since April 2020, while WTI has dropped almost 4 per cent this week, which would be its biggest weekly percentage decline since March.
The Organization of the Petroleum Exporting Countries and other producers (OPEC+) had earlier failed to agree after the UAE sought a higher baseline for measuring its output cuts. This dampened the mood of the market.
An OPEC+ source had been reported to have said the group had agreed to UAE’s request to have its baseline – the level from which cuts under the agreement on supply curbs are calculated – set at 3.65 million barrels per day from April 2022, up from 3.168 million now.
Giving the UAE a higher production baseline paves the way for extending the overall pact to the end of 2022, the source had said.
However, it is not clear since the UAE said it was negotiating and OPEC has not officially disclosed that a deal had been reached.
The alliance had agreed on record output cuts of almost 10 million barrels per day last year to cope with a pandemic-induced slump in demand. The curbs have been gradually relaxed since then and now stand at about 5.8 million barrels per day.
OPEC said on Thursday it expects world oil demand to increase next year to around levels seen before the pandemic, about 100 million barrels per day, led by demand growth in the United States, China and India.
But the rise in coronavirus cases related to the highly contagious Delta variant could trigger new lockdowns that would likely reduce recent bullish oil demand forecasts.
In the United States, Los Angeles County will reimpose its mask mandate this weekend. Britain reported its highest number of new COVID-19 cases in more than six months on Friday.
Dipo Olowookere