Oil on Course for 6% Weekly Drop

Oil on Course for 6% Weekly Drop

Oil prices were down near three-month lows. They were down  for a seventh straight session on Friday. 

Oil prices were on course for a weekly loss of over 6% amid new lockdowns in countries that are facing surging cases of the coronavirus Delta variant. This is clouding the outlook for fuel demand. Increasing restrictions on mobility are raising concerns for oil demand, said ANZ commodity analysts in a note.

At 1042 GMT, Brent crude futures fell 42 cents or 0.6% to $66.03 a barrel. This is near their lowest since May and down over 6% for the week.

U.S. West Texas Intermediate (WTI) crude futures for September fell 49 cents or 0.8% to $63.2 a barrel. They were down over 7% for the week and are due to expire on Friday.

China’s imposition of new restrictions with its “zero tolerance” coronavirus policy is affecting shipping and global supply chains. Moreover, the United States and China have imposed tit-for-tat flight capacity restrictions.

In Australia and New Zealand, the Delta variant outbreaks have also sparked strict lockdowns, dampening fuel demand. Additionally, the  approaching end of the U.S. peak gasoline demand season and end of summer holidays in Europe and the U.S.

Stephen Innes, managing partner of SPI Asset Management said  that  aviation remains the weakest component of global demand at the moment, The risk of further restrictions on domestic and international travel due to the Delta variant will be a key variable for oil over the remainder of H2, particularly as the U.S. driving season ends, he said. 

Meanwhile, in Singapore, residual fuel oil inventories fell 2% in the week ended Aug. 18 to an over five-month low amid limited net imports. This was according to official data shown on Thursday. 

Gold Slightly Higher in Asia

By 11:30 PM ET (3:20 AM GMT), Gold futures were up 0.16% to $1,786.90. Spot gold was also flat. 

In Asia, the dollar has been rallying over the past week and was mostly flat in the morning. It was down just 0.02% to 93.55. 

OANDA analyst Craig Erlam said Gold is certainly benefiting from its safe-haven status. He said, while markets are falling heavily, gold is back in demand.

In the medium-term, downside pressure will remain on gold but that won’t stop it reaping the benefits of the jitters, Erlam added. 

Furthermore, Silver futures were also muted, down 0.08% to $23.212. Platinum futures for October 21 delivery rose 0.45% to $973.90.