By Barani Krishnan
Investing.com - Worries over what OPEC+ will do for August production and the likely impact of the Covid Delta variant in the coming months on oil demand sent crude prices down hard for a second day in a row Thursday.
A rebound in the dollar, the currency oil trades on, also pressured crude prices.
New York-traded West Texas Intermediate crude, the benchmark for U.S. oil, settled down $1.48, or 2%, at $71.65 a barrel. WTI lost 2.8% in the previous session.
London-traded Brent, the global benchmark for oil, fell $1.29, or 1.7%, to finish the session at $73.47. Brent lost 2.3% on Wednesday.
On the OPEC front, Saudi Arabia and the United Arab Emirates appeared to be closing in on an agreement on August production. But the deal still needs to be ratified by the enlarged 23-nation OPEC+ alliance that groups the 13-member Saudi-led Organization of the Petroleum Exporting Countries with 10 assorted producers led by Russia.
Goldman Sachs Group Inc (NYSE:GS). said an accord announced by OPEC+ would be a “bullish catalyst,” that removes the risk of a potential price war between the Saudis and the Emiratis. Even so, the deal could add meaningfully to the alliance’s output, with reports on Wednesday that even the Iraqis were seeking a larger hike, just like the UAE.
Separately, OPEC published its first detailed assessment of 2022, in which it forecast that global oil demand will steadily recover to surpass pre-pandemic levels in the second half of next year. However, it also pointed to a lull in the first quarter.
On the Covid front, vaccination rates are down and cases are on the rise, exacerbated by the more transmissible Delta variant -- and an expert says the key to winning the race against the spread is getting more Americans vaccinated.
"We're losing time here. The Delta variant is spreading, people are dying, we can't actually just wait for things to get more rational," Dr. Francis Collins, director of the National Institutes of Health told CNN Wednesday.
Vaccines have been available to most Americans for months, but still only 48.2% of the country is fully vaccinated, according to the U.S. Centers for Disease Control and Prevention -- and the rate of new vaccinations is on the decline.
Meanwhile, case rates have been going up dramatically. In 47 states, the rate of new cases in the past week are at least 10% higher than the previous week, according to data from Johns Hopkins University. Of those, 35 have seen increases of over 50%.