Oil heads for 6% weekly fall as Delta variant spreads

LONDON, Aug 20 (Reuters) – Oil prices ended up down for a seventh straight session on Friday around three-month lows and heading for a weekly loss of around 6% as new lockdowns in nations dealing with surging scenarios of the COVID-19 Delta variant dampened the outlook for fuel need.

Broader investor hazard aversion also weighed on oil with the U.S. greenback jumping to a nine-month superior on indicators the U.S. Federal Reserve is contemplating minimizing stimulus this yr. read through additional (.DXY)

“The spread of the Delta variant amid moderating financial development and the prospects of tighter monetary policy are generating short-term ripples in the commodity current market,” ANZ commodity analysts mentioned in a note.

“Raising limitations on mobility are increasing considerations for oil demand from customers.”

Brent crude futures fell 42 cents or .6% to $66.03 a barrel at 1042 GMT, in the vicinity of their most affordable due to the fact Could and down more than 6% for the 7 days.

U.S. West Texas Intermediate (WTI) crude futures for September, due to expire on Friday, fell 49 cents or .8% to $63.2 a barrel and ended up down more than 7% for the 7 days.

“The latest lockdowns in main economies close to the earth have most likely harmed the economic functions and development forecasts in the months to appear,” reported Margaret Yang, a strategist at Singapore-dependent DailyFX.

“Japan has extended its unexpected emergency lockdown and confirmed circumstances are on the rise in nations around the world these types of as South Korea, Malaysia, Philippines, Vietnam and Thailand, whose industries have to have oil, which will also be influenced by the Delta variant,” Yang additional.

China has imposed new limits with its “zero tolerance” coronavirus coverage, influencing shipping and worldwide offer chains, and the United States and China have imposed tit-for-tat flight capacity limitations. read much more

Meanwhile Delta variant outbreaks in Australia and New Zealand have also sparked rigorous lockdowns. browse more

The approaching conclusion of the U.S. peak gasoline demand time and close of summertime holidays in Europe and the United States are also set to sap oil demand from customers.

“Aviation continues to be the weakest element of world-wide demand from customers at the minute, and the threat of further restrictions on domestic and international journey thanks to the Delta variant will be a crucial variable for oil over the remainder of H2, specially as the U.S. driving year finishes,” claimed Stephen Innes, controlling husband or wife of SPI Asset Management.

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Reporting by Dmitry Zhdannikov in London, Sonali Paul in Melbourne and Koustav Samanta in Singapore Editing by Simon Cameron-Moore and David Evans

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