Oil Tanks as COVID-19 Resurgence Spurs Demand Worries

By Adedapo Adesanya

Oil prices returned to the bearish territory on Friday, recording their deepest weekly losses in months on worries that travel restrictions to curb the spread of the Delta variant of COVID-19 will derail the global recovery in energy demand.

As a result, the price of the Brent crude lost 92 cents or 1.4 per cent as it traded at $70.33, while the value of the West Texas Intermediate (WTI) moved down by $1.26 or 1.8 per cent to $68.28 per barrel.

For the week, the global crude benchmark, Brent, shed more than 6 per cent, its largest week of losses in four months, while the WTI tumbled nearly 7 per cent in its biggest weekly decline in nine months.

The spread of the delta coronavirus variant casts doubt on the continued recovery in demand, particularly in the world’s biggest crude importer, China.

The country has imposed a patchwork of increasingly strict restrictions on mobility to fight the spread of the highly infectious virus variant, including the cancellation of some flights and train services.

On Friday, the nation reported 101 infections, including 21 people who are asymptomatic, the biggest daily increase in more than six months. Curbs were extended, with passenger services suspended at train stations in Yangzhou, Jiangsu province.

In the US, President Joe Biden provided a gloomy near term outlook about the virus noting that cases in the world’s largest consumer, which have climbed to a six-month high, will go up before they come down and that the new Delta variant is taking a needless toll on the country.

Japan, on its part, is poised to expand emergency restrictions to more regions of the country

In Thailand, daily cases set another record, taking the nation’s total past 700,000, as a tightening of containment measures failed to halt the spread.

In Australia, Sydney’s daily caseload also hit an all-time high, and authorities warned the situation in the nation’s largest city could worse

After soaring in the first half of the year due to resurgent demand and a drawdown in inventories, the latest chapter in the pandemic has made the going for crude a lot tougher.

Also adding to the worries was a stronger US Dollar which makes greenback-denominated oil more expensive for buyers in other currencies.

This came as the greenback strengthened after monthly US job growth came in higher than expected.