(Bloomberg) -- Oil dipped -- trimming a modest weekly gain -- as the fast-spreading delta virus variant continued to cloud the demand outlook.
Futures in New York edged below $69 a barrel after slipping Thursday. The latest Covid-19 wave is leading to renewed curbs on movement across the globe, although there are mixed assessments on its impact. The International Energy Agency cut its demand forecasts for the rest of the year, while Goldman Sachs Group Inc (NYSE: GS ). predicts only a transient hit to consumption.
See also: Cheap U.S. Oil Being Snapped Up in Asia Despite Delta Lingering
Delta has interrupted oil’s rally after a rapid rebound from the pandemic in big economies such as the U.S. helped drive prices more than 50% higher over the first half of the year. The biggest concern is the flare-up in China, where authorities have taken an aggressive approach to containing the outbreak despite having one of the world’s highest vaccination rates.
Oil’s market structure has also taken a hit from delta. Brent’s prompt timespread was 40 cents a barrel in backwardation -- a bullish signal where near-dated contracts are more expensive than later-dated ones -- on Thursday. That compares with 92 cents at the end of July.
Global oil demand “abruptly reversed course” last month, falling slightly after surging by 3.8 million barrels a day in June, the IEA said in its monthly market report on Thursday. The drop in consumption comes as OPEC+ hikes output with the goal to steadily revive all of the production halted during the pandemic.
©2021 Bloomberg L.P.
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