Oil prices fell more than 2% on Monday (August 9), extending last week’s sharp decline on the back of a stronger dollar and concerns that curbing a new pandemic in Asia, especially China, could hurt. affect the global recovery of fuel demand.
Brent crude futures fell $1.52, or 2.2%, to $69.17 a barrel, after falling 6% last week, the biggest weekly drop in four months.
U.S. crude oil (WTI) futures fell $1.64, or 2.4%, to $66.64 a barrel, after falling nearly 7% last week, the biggest weekly drop in nine months.
The rapid spread of the Delta variant has raised concerns about the risk of a drop in global oil demand, said Gordon Ramsay, an analyst at investment bank RBC Capital Markets, based in Canada.
New restrictions in China, the world’s second-largest oil consumer, are the main factor affecting the outlook for demand growth, according to analysts from Melbourne-based ANZ bank (Australia). oil demand.
ANZ analysts said that although the number of cases in China is not high, the outbreak occurred at the height of the summer tourist season. This situation has “clouded” signs of strong demand in other regions.
Restrictive measures include flight cancellations, warnings by 46 cities about travel, and limits on public transport and taxi services in 144 of the worst-affected areas.
Data released over the weekend showed China’s export growth slowed more than expected in July following the outbreak of COVID-19 cases and floods, while import growth was also weaker than expected. . In the first seven months of the year, China, the world’s top crude oil importer, reached 301.83 million tonnes, or 10.39 million bpd, down 5.6 percent year-on-year.
“The price action we see now is really a function of the macro picture,” said Howie Lee, economist at Singapore bank OCBC. The Delta variant is currently causing real risks in the market, not just oil.”
US President Joe Biden says that COVID-19 cases in the US, have risen to a six-month high, and that the new Delta variant is taking a toll on the country.
Japan is poised to extend emergency restrictions to more parts of the country, while China, the world’s second-biggest oil consumer, has imposed restrictions in some cities and canceled flights.
Energy services firm Baker Hughes Co said US oil rigs increased by two to 387 this week. Growth in the number of rigs has slowed in recent months as operators continue to focus on capital regulations.
The US dollar’s rally to a four-month high against the euro also weighed on oil prices, after a stronger-than-expected US jobs report. A stronger dollar makes greenback-denominated oil more expensive for buyers in other currencies.
Trading is quiet with public holidays in Japan and Singapore.
Source: VITIC/Reuters
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