US oil price falls continue, after worst week this year

Oil on the New York Stock Exchange is starting Monday’s session with strong declines after ending the previous week with a plunge. The spread of a new variant of the Delta coronavirus is causing anxiety in the markets and darkening the picture of future demand for oil and its products, brokers report.

A barrel of West Texas Intermediate crude for September delivery on the NYMEX fuel exchange in New York costs $66.96, down 1.93 percent.

Brent crude for October delivery on the ICE Futures Europe exchange in London is priced at 69.41 USD per barrel, down by 1.82 per cent.

The return of Covid-19 and the rapid spread of the Delta variant of the coronavirus is raising concerns about the short-term outlook for demand for oil and its products, as new restrictions are possible in economies.

Beijing authorities are stepping up preventive measures to protect the city from a rising tide of infections with the more contagious Delta variant of the coronavirus that is spreading across China. On Saturday, the state health commission reported 107 new symptomatic infections.

Goldman Sachs analysts cut their full-year GDP forecast for China’s economy to 8.3 per cent from 8.6 per cent previously, and that assumes authorities resolve the outbreak in about a month.

Meanwhile, the number of coronavirus infections in Tokyo reached 4,066 cases on Sunday. For the fifth consecutive day, more than 4,000 cases of infection were reported in the Olympic host city amid fears of the spread of the highly infectious Delta variant.

A record 9,690 cases of coronavirus infection were confirmed by Vietnam’s Health Ministry on Sunday. A day earlier, 7,334 infections were diagnosed. Most of the infections were registered in Ho Chi Minh City and neighbouring Binh Duong and Dong Nai provinces in the Southeast region.

According to data from Johns Hopkins University in Baltimore, the daily average of new cases of the Covid-19 virus in the US has already exceeded 100,000. It is the highest in almost six months.

A medical adviser to the US president warns of an even more dangerous variant of the coronavirus than Delta. “There is a danger of creating a mutation that currently available vaccines will not protect against,” – Dr Anthony Fauci said on Sunday.

Analysts point out that oil prices are under severe pressure this month as global mobility restrictions begin to be re-imposed because of Delta, and this coincides with an increase in crude supplies from OPEC+ countries.

OPEC+ has increased oil production by 400,000 barrels per day since August.

“Oil quotes seem to be getting bogged down, in this whole commodity complex,” – says Daniel Hynes, senior commodity strategist at Australia & New Zealand Banking Group Ltd.

“However, indicators suggest that demand for oil in major markets such as the US and Europe is still strong, and I don’t imagine the current oil sell-off will last too long,” – he adds.

WTI on NYMEX in N.York lost 7.7 percent last week.


Photo: Shutterstock


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