EnergyWatch

Oil resumes decline with demand outlook clouded by Delta spread

Oil headed for the first decline in five days as investors assessed the outlook for demand amid a resurgence in Covid-19 and as broader markets were on a softer footing.

Photo: Jacob Ehrbahn

Oil futures in New York dropped to trade near USD 71 a barrel after a volatile week of trading that saw prices swing wildly in a USD 7 range. There are signs that demand for fuels such as gasoline has increased as vaccination programs are rolled out, although the fast-spreading delta variant has raised concerns about the short-term outlook. Tight restrictions have been renewed including curfews in some places.

The latest virus flare-up has coincided with a salvaged OPEC+ agreement to add more barrels from August, whipping up stiff headwinds for oil and interrupting a price rally. Expectations are for a continued tightening of the market throughout the rest of 2021, however, leading to even higher prices.

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