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Oil Faces More Losses as Demand Recovery Falters Due to Delta

Oil prices fell for a second day today, Friday, after the International Energy Agency warned that the increase in demand for crude oil and its products is slowing down sharply as Covid-19 infections rise around the world.

Brent crude fell 49 cents, or 0.7 percent, to $70.82 a barrel by 05:07 GMT, after dropping 13 cents.

Moreover, US crude fell 53 cents, or 0.8 percent, to $68.56 a barrel, after falling 0.2 percent on Thursday. The two benchmarks are still heading towards achieving a slight gain this week.

“We are now witnessing a faltering recovery in global demand this month, with oil demand reaching 98.3 million barrels per day in August and an average of 97.9 million barrels per day in September, equal to the average of about 98 million barrels per day in July,” said JBM Commodity Research. 

Similarly, Goldman Sachs lowered its estimate of the global oil deficit to 1 million barrels per day from 2.3 million barrels per day, as demand tends to decline in August and September.

The International Energy Agency said yesterday, Thursday, that the increase in demand for crude almost stopped in July and is set to rise at a slower pace over the rest of 2021 due to the mutated Delta strain of the Coronavirus.

“Growth for the second half of 2021 has been downgraded more sharply, as new COVID-19 restrictions imposed in several major oil-consuming countries, particularly in Asia, look set to reduce mobility and oil use,” the agency said.

In apparent contradiction, yesterday, Thursday, OPEC stuck to its expectations of a recovery in global oil demand this year and further growth in 2022, despite growing concern about a rise in Covid-19 infections.