Oil prices edge up, but on track for biggest weekly decline since March

London — Oil prices edged higher on Friday but remained on track for their biggest weekly decline since March on concerns over the impact on fuel demand from travel restrictions to curb the spread of the Delta variant of Covid-19.

Brent crude oil futures were up 39 cents at $71.68 a barrel by 09.40 GMT and US West Texas Intermediate (WTI) crude futures rose 39 cents to $69.48, though both contracts have given up 6% this week.

“The price action we see now is really a function of the macro picture,” said Howie Lee, an economist at Singapore bank OCBC. “The Delta variant is now really starting to hit home and you see risk aversion in many markets, not just oil.”

Japan is poised to expand emergency restrictions to more prefectures while China, the world’s second-largest oil consumer, has imposed curbs in some cities and cancelled flights.

“At least 46 cities have advised against travelling and authorities have suspended flights and stopped public transport. This could impact oil demand as it comes towards the end of the summer travel season,” ANZ said in a report.

Daily new Covid-19 cases in the US have climbed to a six-month high.

However, oil prices gained support from rising tensions between Israel and Iran.

“Opec+ supply hikes should still leave the market in deficit in 2021,” Bank of America analysts said.

Reuters