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Oil falls for the week on supply concerns, rising COVID cases

Brent futures rose 12 cents, or 0.2%, to settle at $73.59 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 16 cents, or 0.2%, to settle at $71.81. Earlier in the volatile session, both benchmarks were down over $1 a barrel.

Despite the small gains, Brent fell almost 3% for the week, marking a decline for the third week in a row for the first time since April 2020. WTI fell almost 4% this week, which would be its biggest weekly percentage decline since March.

U.S. retail sales unexpectedly increased in June as demand for goods remained strong even as spending shifts back to services, bolstering expectations that economic growth accelerated in the second quarter.

With oil prices mostly rising over the last several months, the U.S. oil rig count continued its slow increase, gaining two rigs this week to 380 active units, their highest since April 2020, according to energy services firm Baker Hughes. [RIG/U]

U.S. crude production has increased by 300,000 barrels per day (bpd) over the last two weeks, rising to 11.4 million bpd in the week ended July 9, the highest since May 2020, according to federal data. [EIA/S]

Saudi Arabia and the United Arab Emirates reached a compromise earlier this week, paving the way for OPEC+ producers to finalise a deal to increase production.

“The longer it takes for OPEC+ to announce an extraordinary meeting to vote on the extra barrels, the more it implies other OPEC+ members may also want increases to their baseline quota,” said Bob Yawger, director of energy futures at Mizuho in New York, noting reports Iraq was seeking to increase its baseline.

OPEC+, which groups the Organization of the Petroleum Exporting Countries with Russia and other producers, had earlier failed to agree after the UAE sought a higher baseline for measuring its output cuts.

OPEC said on Thursday it expected world oil demand to increase next year to around levels seen before the pandemic, about 100 million bpd, led by demand growth in the United States, China and India.

But the rise in coronavirus cases related to the highly contagious Delta variant could trigger new lockdowns that would likely reduce recent bullish oil demand forecasts.

In the United States, Los Angeles County will reimpose its mask mandate this weekend.

Britain reported its highest number of new COVID-19 cases in more than six months on Friday.

(Additional reporting by Ahmad Ghaddar in London, Aaron Sheldrick in Tokyo and Florence Tan in Singapore; Editing by Marguerita Choy, Louise Heavens, Barbara Lewis and Andrea Ricci)


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