NEW YORK: Oil prices fell nearly 1% on Friday, hitting their biggest weekly loss in months, on concerns that travel restrictions to stem the spread of the delta version of COVID-19 could hamper a global recovery in energy demand. Will derail.
Crude futures also came under pressure as the dollar strengthened after higher-than-expected monthly US employment growth. A stronger dollar makes greenback-valued oil more expensive for buyers in other currencies.
Brent crude oil futures fell 59 cents, or 0.8%, to $70.70, while US West Texas Intermediate (WTI) crude futures fell 81, or 1.2%, to $68.28 a barrel.
For the week, global benchmark Brent dropped more than 6%, its biggest week loss in four months, and WTI fell nearly 7% in its biggest weekly drop in nine months.
Howie Lee, an economist at Singapore bank OCBC, said, “The price action we see now is really a function of the macro picture. The delta version is now really starting to hit home and you see risk aversion in many markets. and not just oil.”
US President Joe Biden said that COVID-19 cases in the United States, which have climbed to a six-month high, will rise before coming down and that the new delta variant is taking an unnecessary toll on the country.
Japan is set to expand emergency restrictions to more areas of the country, while China, the world’s second largest oil consumer, has imposed restrictions and canceled flights in some cities.
“The heightened travel restrictions in China have come under the microscope of traders and could become a major oil price mover as this month turns out,” said Jim Ritterbush, president of Ritterbush & Associates LLC in Galena, Illinois.
Energy services firm Baker Hughes Co said US oil spills rose by two to 387 this week. Growth in rig count has slowed in recent months as drillers continue to focus on capital discipline.
(Additional reporting from Noah Browning Dmitry Zhdannikov Editing by Marguerita Choy and David Gregorio)
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