Brent crude managed to stabilize above $70 a barrel, despite warnings from the International Energy Agency (IEA) of slowing oil demand, as a result of mutated strains of the Coronavirus.
Brent crude fell 14 cents, or 0.2 percent, to $71.17 a barrel, and US crude fell 18 cents, or 0 .2 percent, to $68.91 a barrel.
During the week, the two benchmarks rose less than 1 percent, despite the pressures of the pandemic.
The IEA said that crude demand growth almost stopped in July. It is set to rise at a slower pace over the rest of 2021 due to the increase in infections with the Delta strain of the Corona virus, it said.
IEA also said growth was reduced in the second half of 2021 at a sharp pace, as it appears that the new restrictions to combat Covid-19 imposed in several large oil-consuming countries, especially in Asia, will reduce the movement and use of oil.
“We now estimate that demand fell in July as the rapid spread of the COVID-19 Delta variant undermined deliveries in China, Indonesia and other parts of Asia,” it said in its monthly oil report.
“The sudden about-face by the IEA has shaken nerves and capped the oil rally, bringing home the reality of the impact of the Delta variant,” said Jeffrey Halley, OANDA’s senior market analyst for Asia Pacific.
Banks have also lowered their forecasts for demand in the near term.
On Thursday, OPEC stuck to its expectations of a recovery in global oil demand this year, and achieving further growth in 2022, despite the growing concern about the rise in COVID-19 infections.
But the Organization of the Petroleum Exporting Countries (OPEC) also raised its forecast for supplies next year from other producers, including American shale oil producers.
This may hinder the efforts of the organization and allied producers, the group known as OPEC+, to achieve a balance in the market.
The organization said it expects demand to rise 5.95 million barrels per day this year, or 6.6 percent, unchanged from its forecast last month.
“The global economy continues to recover,” OPEC said in the report. “However, numerous challenges remain that could easily dampen this momentum. In particular, COVID-19-related developments will need close monitoring.”
OPEC stated that in 2022, fuel use will increase by 3.28 million barrels per day, also unchanged from expectations issued last month.
In turn, the American investment bank Goldman Sachs expected the continued decline in oil prices in light of the temporary impact of demand in oil as a result of the spread of the mutated Delta strain of the emerging Coronavirus in China.
The bank lowered its forecast for China’s oil demand in the next two months, citing mounting concerns about the impact of the next wave of Covid-19 infections, according to Reuters.
Already trimmed its forecast last month for emerging market demand due to the delta mutant strain, the bank said in a note that it now expects demand to be hit 1 million barrels per day in China.
The bank said that the net impact of Delta in its forecast for global oil demand remains moderate, and reduced its forecast for demand in the next two months to 97.8 million barrels per day from 98.4 million barrels per day achieved in July.