Oil prices fell on Thursday, after the International Energy Agency lowered its oil demand forecasts for the rest of the year after several major energy-consuming countries imposed fresh curbs to stop the spread of the Delta coronavirus variant.
Brent crude futures fell 45 cents to US$70.99 a barrel by 11:09 a.m. EDT (1509 GMT). Earlier, Brent hit a session high of US$71.90.
US West Texas Intermediate (WTI) crude futures fell 47 cents to US$68.78 a barrel.
The economic impact of the Covid-19 Delta variant and rebounding output mean that expectations of global oil demand outstripping supply are fading, the IEA and OPEC said Thursday.
In its closely watched monthly market report, the International Energy Agency said that the worsening of the pandemic, as well as revisions to historical data, mean its global oil demand outlook has been “appreciably downgraded,” with some of this year’s forecast recovery shifted to 2022.
Investors have become concerned about falling commodities demand in China, where Beijing authorities last week canceled all large-scale exhibitions and events for the remainder of August. That, and other measures aimed at slowing the spread of the Delta variant, has in recent days spooked traders who were already worried about the fragile nature of China’s economic recovery.
The IEA cut its 2021 global oil demand growth forecast by 100,000 barrels a day, while upgrading its 2022 forecast by 200,000 barrels a day. Both the IEA and OPEC expect the world’s thirst for oil to return to pre-pandemic highs in the second half of next year.
In its monthly report that also came out on Thursday, the Organization of the Petroleum Exporting Countries (OPEC) stuck to its prediction of a strong recovery in world oil demand in 2021 and 2022, despite concerns about the spread of the virus.
That came a day after the United States urged OPEC and its allies, known as OPEC+, to boost oil output to tackle rising gasoline prices, which it sees as a threat to the global economic recovery.
OPEC agreed in July to boost output each month by 400,000 bpd versus the previous month, starting in August, until the rest of their record cuts of 10 million bpd, about 10% of world demand, made in 2020 are phased out.