Oil steady, above $71 amid tighter market outlook
Oil remained steady and held the bulk of a three-day advance, trading above $71 as confidence that the increasing demand will tighten the global market takes hold.
West Texas Intermediate dropped 0.3% in early Asian trading, putting a stop to its over 8% rally in the previous three sessions. The previous sessions’ gains mean that prices moved very little on the week, having recovered nearly the entire drop experienced on Monday, when crude plummeted amid fears of economic repercussions due to the spread of the Delta variant of the coronavirus.
Crude has bounced back this year as the rollout of vaccines allowed economies to reopen, fuelling energy demand and consuming the excess supplies that had built up during the pandemic.
While the spread of the more virulent Delta variant has halted the recovery process, particularly in parts of Asia where cases are continuing to rise, investors are still betting that the be broader positive narrative remains intact. This week’s data have shown that demand for gasoline has basically returned to normal in many of the largest oil-consuming countries.
The Organization of Petroleum Exporting Countries and allies (OPEC+) intends to add 400,000 barrels a day to the market in August and the succeeding months, until the supply cuts introduced in the early days of the pandemic have been fully reversed.
In other oil news, Brent’s prompt time spread was 62 cents a barrel in backwardation on Friday, retaining its bullish pattern from the level seen in the previous week.