Oil: The Story Hardly Gets Better After Another Dismal Week

© Reuters.

By Barani Krishnan

AiVIF.com - Another week, and the story in oil is hardly any better.

U.S. crude scraped together a tiny gain for the week, while Brent couldn’t even manage that.

The insistent drone of the Covid narrative, via the Delta variant, and a dismal U.S. consumer reading for August put paid to any comeback by crude prices on Friday.

New York-traded West Texas Intermediate crude, the benchmark for U.S. oil, settled down 65 cents, or 0.9%, at $68.44 per barrel. For the week, it rose 0.2% — barely a makeup for last week’s 7.7% plunge, which was  its sharpest since October 2020.

London-traded Brent, the global benchmark for oil, settled down 72 cents, or 1%, at $70.59. For the week, Brent fell 0.2%, after last week’s 7.4% drop.

Oil “is in a bit of a no-mans-land and it could take a few days to gather steam for another run,” Phil Flynn, analyst at Chicago’s Price Futures Group, said. “If Covid concerns ease a bit then reports of falling global oil inventories should ignite another rally.”

Flynn’s remarks came after the watchdog for western oil consumers warned on Thursday that Covid’s Delta variant will slow down demand growth for energy in the second half of the year.

The outlook by the IEA, or International Energy Agency, came on the same day that OPEC, or the Organization of the Petroleum Exporting Countries, issued its for oil demand growth forecast for 2021 and 2022. OPEC kept its forecast unchanged despite the risk of the Delta variant.

The IEA, on its part, put last month’s demand slump for oil at 120,000 bpd, or barrels per day. It also predicted growth to be half a million bpd lower in the second half than it had originally estimated in July.

Adding to the pessimism of the IEA, the University of Michigan said on Friday its closely-followed U.S. Consumer Sentiment Index  plunged to a decade low in August on concerns about another economic slowdown due to the Delta variant.