Oil Records Fourth Monthly Gain over Swelling Demand

By Adedapo Adesanya

Oil prices edged higher on Friday, with the global crude benchmark, Brent, posting a fourth monthly gain as demand is seen growing faster than supply.

Yesterday, the oil futures went up by 28 cents or 0.37 per cent at $76.33 per barrel, while the West Texas Intermediate (WTI) crude oil futures closed 19 cents higher or 0.26 per cent at $73.95 per barrel.

Prices ended higher for the week on the back of the favourable supply and demand dynamics as concerns over the Delta variant’s impact on global fuel demand ease, supporting oil bulls moving forward.

Analysts noted that the oil market no longer appears to be viewing the issue of the Delta variant with quite the same alarm as it was at the beginning of last week.

This is as vaccinations are expected to alleviate the impact of a resurgence in COVID-19 infections across the globe. Market analysts noted that higher vaccination rates would limit the need for the harsh lockdowns that affected demand during the peak of the pandemic last year.

Yet, coronavirus cases continue to rise in the United States, all around Asia and parts of Europe, but this will likely not derail demand growth in the second half.

The decline in US crude inventories is also supportive of oil prices as it encourages the demand outlook. The Energy Information Administration (EIA) reported that US crude inventories fell by 4.1 million barrels for the week ended July 23, marking the ninth weekly decline in 10 weeks.

Signs that US petroleum output is falling also lent support as production fell by 200,000 barrels to 11.2 million barrels per day last week, according to the agency.

Optimism also surfaced due to a rapid rebound in India’s petroleum consumption and industrial production following its COVID-19 surge, indicating that economies are more resilient.

Russian Deputy Prime Minister Alexander Novak said oil consumption was increasing across the globe.

“Demand is on the rise, consumption is on the rise. Of course, the coronavirus is still there but … there are no such lockdowns as there were before,” he said.

The number of US oil rigs has risen for 11 straight months, but fell two to 385 this week, data showed on Friday.