Oil Down, But Remains Above $70 Mark as Tight Market Hopes Prevail

© Reuters.

By Gina Lee

AiVIF.com – Oil was down Friday morning in Asia, but held onto the bulk of a three-day advance, as optimism that rising demand will tighten the global market prevailed.

Brent oil futures were down 0.37% to $73.52 by 11:24 PM ET (3:24 AM GMT). WTI futures fell 0.38% to $71.64 and was 0.3% lower in early Asian trading after rallying more than 8% in the preceding three sessions.

However, both Brent and WTI futures remained above the $70-mark, and prices were almost unchanged as the week draws to a close. The black liquid has clawed back almost all its losses from earlier in the week, when concerns about the rising number of COVID-19 cases involving the Delta variant globally clouded the fuel demand outlook and the Organization of Petroleum Exporting Countries and its allies (OPEC+) resolving a supply dispute caused a slump in prices on Monday.

The rollout of COVID-19 vaccines that allowed economies to re-open contributed to crude’s rally in 2021 as fuel demand increased and drained the oversupply that had built up during the pandemic.

The emergence and spread of the COVID-19 Delta variant have slowed that rally down, however, as countries re-impose restrictive measures to curb the spread of their latest outbreaks.

The U.S. is “at another pivotal moment,” in the pandemic said Centers for Disease Control and Prevention Director Rochelle Walensky, with COVID-19 cases particularly in unvaccinated parts of the population, rising in the country.

Even so, investors remain encouraged by Thursday’s data from the U.S. Energy Information Administration that showed a 121,00-barrel draw in gasoline inventories, an indication that demand remains high amid the summer driving season.

Meanwhile, the resolution of the OPEC+ dispute earlier in the month will see 400,000 barrels a day added to the market from August until supply cuts imposed at the outset of COVID-19 are fully reversed. Investors also continue to monitor the progress made by Iran and other world powers to revive a 2015 nuclear deal that would lift U.S. sanctions on its crude supply.