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Oil dips, little changed on week despite weaker demand forecasts

CommoditiesAug 13, 2021 06:05PM ET
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© Reuters. A man holds a fuel pump at a gas station in Rio de Janeiro, Brazil July 8, 2021. REUTERS/Amanda Perobelli/Files

By Laura Sanicola

NEW YORK (Reuters) -Oil prices dipped on Friday and ended the week little changed after weathering concerns from banks and the International Energy Agency that the spread of coronavirus variants is slowing oil demand.

Global oil benchmark Brent crude settled down 72 cents, or 1%, at $70.59 a barrel for the session. U.S. West Intermediate crude settled down 65 cents at $68.44.

For the week, Brent fell less than 1%, after dropping 6% last week, its largest week of losses in four months. Last week WTI slumped nearly 7% in its biggest weekly decline in nine months.

On Thursday, the IEA said demand for crude oil ground to a halt in July and was set to rise at a slower pace over the rest of the year because of surging infections from the Delta variant of the coronavirus.

Still, oil has remained supported by improved demand in the world's top consumer, the United States and other nations where the COVID-19 vaccination rate is higher.

"While the IEA's report was pretty dour on demand, in the near term, it's pretty clear that there's a supply deficit and that's likely to continue as we're seeing airline travel restrictions get lifted in the U.S.," said John Kilduff, partner at Again Capital LLC in New York.

Major banks Goldman Sachs (NYSE:GS) and JPM Commodities Research are less bullish on oil due to the rising infection rate.

Goldman cut its estimate for the global oil deficit to 1 million barrels per day from 2.3 million bpd in the short term, citing an expected decline in demand in August and September.

However, Goldman expects the demand recovery to continue alongside rising vaccination rates.

"A recent flow of favorable U.S. macroeconomic guidance also suggests further improvement in petroleum demand once the Delta Variant subsides," said Jim Ritterbusch, president of Ritterbusch and Associates LLP in Galena, Illinois.

JPM, meanwhile, said it now sees the "global demand recovery stalling this month" with demand remaining roughly in line with the 98 million bpd average for global consumption in July.

By contrast, the Organization of the Petroleum Exporting Countries (OPEC) on Thursday stuck to its forecast for a rebound in global oil demand this year and further growth in 2022, notwithstanding the rising concern over surges in COVID-19.

U.S. energy firms added the most oil rigs in a week since April as the total rig count more than doubled from a record low a year ago, energy services firm Baker Hughes Co BKR.N said.

U.S. oil rigs rose 10 to 397 this week, their highest since April 2020, and up from 172 a year ago, which was their lowest since 2005 before the shale boom boosted activity.

The combined oil and gas rig count, an early indicator of future output, rose by nine to 500 in the week to Aug. 13, which puts it up 105% from a record low of 244 this time last year, according to Baker Hughes data going back to 1940.

Oil dips, little changed on week despite weaker demand forecasts
 

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Comments (6)
Alan Rice
Alan Rice Aug 13, 2021 6:31PM ET
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"weaker demand forcasts": a quanta of light shining on DARK Planet.
Whaling Trawler
Whaling Trawler Aug 13, 2021 10:17AM ET
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Oil isn't going anywhere. We will all be pumping gas into our cars for the rest of the century
Whaling Trawler
Whaling Trawler Aug 13, 2021 10:16AM ET
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$300/barrel by 2030
Darin Stone
Darin Stone Aug 13, 2021 9:25AM ET
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If your going to say $70 a barrel you have to say US or UK oil...... c'mon man - BIDEN
Joel Schwartz
Joel Schwartz Aug 13, 2021 12:11AM ET
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Oil has peaked. With alternate energy vehicles on the rise and interest rates unable to go negative, there is only one trend from here.
Pratt Man
Pratt Man Aug 12, 2021 11:21PM ET
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Car companies are moving to electric. In 10 years, nobody will care about oil.
Paul Dunne
Paul Dunne Aug 12, 2021 11:21PM ET
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And where does most of the electricity to change car batteries come from? Oil and other fossil fuels. The Great Green Scam.
Jeffrey Vose
Jeffrey Vose Aug 12, 2021 11:21PM ET
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Almost everything you own is made from oil
Drew Bednar
Drew Bednar Aug 12, 2021 11:21PM ET
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We have a natural gas fired power plant here in Pennsylvania that creates electicity to send to NYC !! They exact natty gas in the surrounding counties via fracking and pipe it many miles to the plant. The switch to EV obviously needs electric. Get making it !! Far more destructive process .....The Green Scam is already here. Oil and other fossil fuels will need to be ramped up unless we go to wind or water to create electricity. Lots of water in the West !! Electricity demand during super hot summers already is a problem wherein grids get shut down or cut in favor of others. Biden and Congress are cluless !!
Scott Reyes
Scott Reyes Aug 12, 2021 11:21PM ET
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Pratt dude my guy there's a reason why we have combustion engine will always be highly more fuel efficient than any electric car . 100 to 1 fuel to weight and range capacity for one. plus there's this thing called energy lost when transmit power, change level and phase change , when you store it there's significant power loss . I'm all about green but unless your cars nuclear powered it's just never gonna be any where near as efficient. I will give you this ice engines vs ELECTRIC motors , EV is more mechanically efficient but not on energy and will not be for a long ass time. electric cars are just an expensive FAD .
 
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