The Brent benchmark oil price fell for a second day on Friday, albeit holding above $70 a barrel, after the International Energy Agency (IEA) warned demand growth for crude is slowing sharply owing to the spread of coronavirus variants. Brent crude was down 15 cents, or 0.2 per cent, at $71.16 a barrel by 09.31am GMT. US crude was off by 21 cents, or 0.3 per cent, at $68.88. Over the week the benchmarks are up less than one per cent. Reuters reports that growth in demand for crude ground to a halt in July and is set to rise at a slower pace over the rest of 2021 because of surging infections from the Delta variant of the coronavirus, the IEA said on Thursday.
“The sudden aboutface by the IEA has shaken nerves and capped the oil rally, bringing home the reality of the impact of the Delta variant,” said Jeffrey Halley, Oanda’s senior market analyst for Asia Pacific. “We now see the global demand recovery stalling this month with oil demand only reaching 98.3-million barrels a day in August and averaging 97.9-million barrels a day in September, on par with the nearly 98-million barrels a day average in July,” JPM Commodities Research said. Similarly, Goldman Sachs has reduced its estimate for the global oil deficit to 1-million barrels a day from 2.3-million barrels a day in the short term, citing an expected decline in demand in August and September.