Oil futures ended lower Friday, with concerns about growing supply and weakening appetite for energy, as global cases of COVID rise in Europe, Brazil and India in particular, prompting prices to post a loss for the week.
“When infections rise in such populous countries such as India and Brazil, that can only mean more trouble for oil demand as to counter the infection surge, restrictions will limit road fuel consumption,” said Louise Dickson, oil markets analyst at Rystad Energy.
COVID-19 lockdowns and traffic limitations are “continuing to weigh on oil prices and it will take some time to reach the other end of the tunnel” and vaccinate enough people to justify reopening economic activity and travel, she said in daily commentary.
While the focus on the current situation is pushing down oil prices, Rystad Energy remains “bullish on the vaccine campaign curve, and summer oil demand still looks poised to pop,” said Dickson, adding that Brent crude prices are likely to see an upward correction toward $66 in the third quarter.
On Friday, West Texas Intermediate crude for May delivery
fell 28 cents, or 0.5%, to settle at $59.32 a barrel on the New York Mercantile Exchange. Global benchmark June Brent crude
edged down by 25 cents, or 0.4%, at $62.95 a barrel on ICE Futures Europe.
For the week, Dow Jones Market Data show WTI oil 3.5% below the April 1 settlement, which marked the end of that holiday-shortened trading week. Brent marked a loss of 2.9%.
Energy markets have also been influenced by the decision of members of the Organization of the Petroleum Exporting Countries and its allies in a recent meeting to slowly unwind output curbs.
OPEC+, which includes Saudi Arabia and Russia, agreed to gradually increase oil production by about 2 million barrels a day between May and July.
Energy traders are anticipating that demand will be strong in the second half of 2021 but questions about COVID variants and troubles with the AstraZeneca vaccine have raised some questions about how quickly an economic rebound will take hold in some countries.
“Still, the conflicting signals around OPEC+ supply coming back to market amid spiking coronavirus case numbers…together with reports linking the UK’s [COVID-19] vaccine workhorse to the higher frequency of blood clots, continues to hold the bulls at bay,” wrote Stephen Innes, chief global markets strategist at Axi, in a daily note.
May natural gas
added 0.2% to $2.53 per million British thermal units, but saw a weekly loss of 4.3%.
On Thursday, oil market participants blamed a bigger-than-expected weekly increase in U.S. gasoline stocks for softness in values for U.S. oil futures.
The Energy Information Administration on Wednesday reported that gasoline supply was up by 4 million barrels. IHS Markit had forecast weekly supply increases of 200,000 barrels for gasoline.