Oil heads for 7% weekly slide as the Delta variant spreads
Oil prices fell for a seventh straight session on Friday towards three-month lows as investors became less bullish about fuel demand due to a surge in cases of the COVID-19 Delta variant that is hitting travel.
Brent crude fell $1.03, or 1.6%, to $65.42 a barrel by 11:55 a.m. EDT (1555 GMT), near its lowest since May and down about 7% for the week.
U.S. West Texas Intermediate (WTI) crude for September, due to expire on Friday, fell $1.07, or 1.7%, to $62.62 a barrel and was down almost 8% for the week.
China, the world's largest crude importer, has imposed new restrictions with its "zero tolerance" coronavirus policy which is affecting shipping and global supply chains. The United States and China have also imposed tit-for-tat flight capacity restrictions.
"They are acting severely for minimal outbreaks which is a direct threat for the demand profile there," said John Kilduff, partner at Again Capital LLC in New York.
Several U.S. several firms, meanwhile, have delayed return-to-office plans as Delta cases spike and countries across Asia are reimposing lockdowns. Apple Inc, the largest U.S. company by market value, is delaying the return of its workers until early 2022, Bloomberg reported.
"The (energy) complex has run into a multi-faceted headwind this week ... a further strengthening in the U.S. dollar that has combined with ongoing concerns over uptrends in coronavirus cases," said Jim Ritterbusch, president of Ritterbusch and Associates LLC in Galena, Illinois.
The U.S. dollar hit a nine-month high on signs the U.S. Federal Reserve is considering reducing stimulus this year. Oil prices move inversely to the U.S. currency, making oil more expensive for foreign purchasers when the dollar rallies.
Oil demand could also fall as the period of peak U.S. gasoline demand nears its end and European summer holidays come to a close.
Lockdowns in other in major economies around the world have likely harmed the economic activities and growth forecasts in the months to come, said Margaret Yang, a strategist at Singapore-based DailyFX.
"Japan has extended its emergency lockdown and confirmed cases are on the rise in countries such as South Korea, Malaysia, Philippines, Vietnam and Thailand, whose industries need oil, which will also be affected by the Delta variant," Yang added.
Delta variant outbreaks in Australia and New Zealand have also sparked strict lockdowns.
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