Oil falls but heads for strong weekly gain on demand growth
By Kathi on Jul 30, 2021 | 02:30 AM IST
Both benchmark contracts were headed for gains of around 2%
for the week
Oil prices fell on Friday but were on track to post solid
gains for the week with demand growing faster than supply, while vaccinations
dampen the impact of a resurgence in coronavirus cases worldwide.
Brent crude futures for September, which expires on Friday,
fell 45 cents, or 0.6%, to $75.60 a barrel by 0506 GMT, following a 1.75% jump
on Thursday.
The more active Brent contract for October was down 48
cents, or 0.6% to $74.62 per barrel.
U.S. West Texas
Intermediate (WTI) crude futures fell 43 cents, or 0.6%, to $73.19 a
barrel, whittling down a 1.7% rise from Thursday.
Both benchmark contracts were headed for gains of around 2%
for the week, buoyed by indications of tight crude supplies and strong demand
in the United States, the world's biggest oil consumer.
"We've got stronger prices for a bit longer now,
because it's a fundamental supply-demand issue in terms of the recovery in
demand we're seeing in places like the United States," said Justin Smirk, senior
economist at Westpac.
U.S. crude and gasoline inventories fell sharply in the
latest week, with crude stocks at Cushing at their lowest since January 2020,
reflecting strong demand growth. ANZ analysts noted even jet fuel consumption
in the country had hit its highest level since March 2020.
Even with coronavirus cases rising in the United States,
all around Asia and parts of Europe, analysts said rising vaccination rates
would limit the need for the harsh lockdowns that gutted demand during the peak
of the pandemic last year.
"I think the risks of the large shutdowns we saw last
year are much lower," Smirk said.
Analysts point to a rapid rebound in India's gasoline
consumption and industrial production following its COVID-19 surge earlier this
year as a sign that economies are more resilient to the pandemic.
"Yes, Delta is a risk, but is it going to derail
demand growth in the second half? We may not see that," said Commonwealth
Bank commodities analyst Vivek Dhar.