Oil fell for a fourth day in New York as concerns over the delta coronavirus variant rose, and a dispute at the heart of OPEC kept the market guessing on the prospects for supply.
West Texas Intermediate futures lost 1.2 per cent. The renewed spread of the virus is bringing on anxiety about global growth, driving equities lower and reversing bets on reflation. The dollar is also near the highest level since April, making commodities priced in the currency less attractive.
The World Health Organization urged caution on the pace of reopenings worldwide, with many regions seeing infections spreading. Indonesia is in the throes of a major outbreak, Thailand is set to consider a partial lockdown, and Japan is planning to declare a state of emergency over the Tokyo Olympics.
A spat between Saudi Arabia and the United Arab Emirates derailed plans by OPEC+ nations to boost output in August and beyond to meet rising demand. While the impasse may tighten the market in the short term, it also creates division in the producer group and raises the specter of a price war should producers opt to boost output unilaterally.
The row has even spurred speculation the UAE may go as far as to quit the Organization of Petroleum Exporting Countries altogether, threatening the unity and control the group and its allies have fought hard for since the pandemic upended the oil market early last year.
“With the non-agreement, the supply side of the oil equation has been thrown into chaos,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London. “Discord, let alone an output war, within OPEC+ will not be well received by the market.”
Prices:
- WTI for August delivery fell 88 cents to US$71.32 a barrel as of 11:46 a.m. London time
- Brent for September settlement lost 65 cents to US$72.78 a barrel
Crude’s decline this week comes despite another draw in U.S. stockpiles. The American Petroleum Institute said crude holdings fell almost 8 million barrels last week, while inventories of gasoline also dropped, according to people familiar with the data. Official figures are due later on Thursday.
Related coverage:
- The world’s largest oil company, Saudi Aramco, is planning to raise tens of billions of dollars by selling more stakes in its businesses.
- The U.S. sees limited domestic oil production growth through next year despite rising oil prices and rebounding demand.
- European imports of refined products from the Middle East, mostly middle distillates, are expected to rebound in July.
