Oil Futures Settle Notably Lower On Demand Worries

Crude oil futures settled lower on Friday with traders largely making cautious moves as they weighed the outlook for energy demand amid lingering worries about spikes in the delta variant of the coronavirus in several countries.

West Texas Intermediate crude oil futures for September ended down by $0.65 or about 0.9% at $68.44 a barrel. However, despite closing the session on a weak note, WTI crude futures posted a modest 0.2% gain for the week.

Brent crude futures were down $1.22 or 1.7% at $70.09 a barrel a little while ago.

The International Energy Agency (IEA) said on Thursday that energy demand is set to rise at a slower pace over the rest of 2021 because of the surge in infections from the Delta variant of the coronavirus.

A monthly report from OPEC on Thursday suggested that the cartel was sticking to its recent forecast for a rebound in oil demand globally this year and further growth in 2022, despite surging COVID-19 infections worldwide.

Meanwhile, Goldman Sachs has reduced its estimate for the global oil deficit to 1 million bpd from 2.3 million bpd in the short-term given the threat to demand from Delta.

“We don’t see the recent White House statement as threatening the current market deficit nor the pace of the rebalancing in 2H21,” the U.S. investment bank said.

According to a report released by Baker Hughes this afternoon, the combined oil and gas rig count in the U.S. rose for a second week in a row, going up by nine to 500 in the week to August 13, the highest level since April 2020.

The total rig count was up 256 rigs, or 105%, from a record low of 244 this time last year, the data said. Oil rigs rose by 10 to 397 this week, while gas rigs fell to 102.

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