Oil Up, but Set For Biggest Weekly Loss as COVID-19 Concerns Persist

Oil was up Friday morning in Asia but headed towards its biggest decline since late October 2020. Concerns as countries implement restrictive measures to curb their latest COVID-19 outbreaks continue to cloud the fuel demand outlook. However, the ongoing tensions in the Middle East between Iran and Israel helped cap the black liquid’s losses.

Brent oil futures edged up 0.13% to $71.38 by 1:07 PM ET (5:07 AM GMT) and WTI futures edged up 0.12% to $69.17.

“The price action we see now is really a function of the macro picture… the Delta variant is now really starting to hit home and you see risk aversion in many markets, not just oil,” OCBC bank economist Howie Lee told Reuters.

Japan extended its state of emergency earlier in the week to more prefectures outside Tokyo, while China, the world’s top oil importer, imposed restrictive measures as it deals with its latest outbreak.

“At least 46 cities have advised against traveling, and authorities have suspended flights and stopped public transport. This could impact oil demand as it comes towards the end of the summer travel season,” ANZ said in a report.

CMC Markets analyst Kelvin Wong also said that oil’s upside has been capped by improving crude supplies in the U.S., while the lead-up to the latest U.S. jobs report, including non-farm payrolls data, due later in the day, caused investors to be cautious.