Oil’s worst week looms amid OPEC+ worries, virus concerns
Oil is set for its largest weekly decline since mid-March as the rising number of COVID-19 cases in various parts of the world, coupled with a murky prospect that the Organization of Petroleum Exporting Countries and allies (OPEC+) would reach a deal to boost supplies, cast uncertainty on the short-term outlook.
Futures in New York suffered losses to trade around $71 a barrel, closing on Thursday at the lowest level in a month. As the novel Delta variant of the COVID-19 spread quickly around the globe, governments put up new restrictions to halt the virus’ onslaught, dampening the demand for fuel.
The United Arab Emirates is getting close to a deal that would afford it better terms and enable the OPEC+ to increase production in the coming months. However, little is still known regarding the details of the negotiations with Saudi Arabia.
Oil paused to catch its breath in July after its continuous rise in seven of the previous eight months as the world’s economy bounced back from the effect of the COVID-19 pandemic. Risks appear to sway towards the upside, with the International Energy Agency cautioning on Tuesday that the market would be significantly constrained if the OPEC+ fails to reach a deal to boost output.
OPEC+ reported on Thursday that demand for supplies from the group will continue to climb and remain above the current production and exceed pre-pandemic levels by the second half of 2022.