World oil prices fell for the seventh consecutive session on August 20 and ended the week with the biggest decline in more than nine months.
Investors continued to sell off futures contracts on anticipation of weakening fuel demand worldwide, as the number of COVID-19 infections continued to increase and the situation in Afghanistan remained complicated.
North Sea Brent crude oil price fell $1.27, or 1.9 percent, to $65.18 a barrel, the lowest level since April.
The price of US light sweet crude (WTI) for September delivery also lost 1.37 USD (equivalent to 2.2%) to 62.32 USD/barrel.
A recent note by analysts at ANZ bank (Australia) said that the spread of the Delta variant amid modest economic growth and the prospect of tightening monetary policy is creating ” short-term ripples in the commodity market.
Among them, growing travel restrictions are raising concerns about oil demand.
Japan has extended the state of emergency. The number of new confirmed cases is increasing as the Delta variant spreads in countries such as South Korea, Malaysia, the Philippines, Vietnam and Thailand, which will also affect the oil-intensive industries of those countries. this.
China, the world’s largest crude oil importer, has imposed new restrictions with a zero-tolerance policy on COVID-19, thereby affecting shipping operations and global supply chains.
The nearing end of the peak US gasoline demand season, as well as the end of the European summer break, could both reduce oil demand in the coming period.
John Kilduff, partner at financial brokerage Again Capital LLP in New York, said it was hard for oil prices to find any support in this volatile situation.
In general, the world oil market had a forgettable trading week with most sessions recording a decrease of 1% or more.
With the seventh consecutive drop on August 20, Brent oil prices closed this week with a loss of 8%, while WTI oil prices lost more than 9%.
While the Delta variant pulls back fuel demand, supply has steadily increased.
Energy industry services firm Baker Hughes said U.S. oil production rose to 11.4 million bpd in the most recent week. The country’s oil rig count also increased for the third consecutive week.
Along with that, the Organization of the Petroleum Exporting Countries (OPEC) and major non-OPEC producers (the OPEC+ group) are gradually increasing the supply of capital that was cut in the early stages of the pandemic.
Meanwhile, the US and China have introduced capacity restrictions, threatening to push global jet fuel demand deeper after improving for most of the summer.
Mr. Stephen Innes, senior manager of asset management company SPI Asset Management (USA) said that aviation is still the weakest link in the global oil demand chain at the moment.
This expert said, the risk of more restrictions on domestic and international travel due to the Delta variant will be the main factor affecting oil prices in the second half of 2021, especially when the driving season is low. car in the US ends.