Oil Heads For Steady Week On Supply Tightness

Oil prices dropped on Friday but were poised to end the week largely steady after rebounding from a sharp drop earlier in the week amid expectations that recovering demand from the U.S. to India and Europe will further tighten global crude markets.

Brent crude futures dipped 23 cents, or 0.3%, to $73.56 a barrel, after jumping 2.2% on Thursday. For the week, Brent was set to end the week flat.

U.S. West Texas Intermediate (WTI) crude futures fell 23 cents, or 0.3%, to $71.68 a barrel, following a 2.3% gain on Thursday. WTI was headed for a 0.2% weekly loss.

Petrol demand is essentially back to normal in many of the biggest oil-consuming countries, with road traffic data showing a similar trend.

Europe’s air traffic rose over the past two weeks, with close to two-thirds of flights in the same period in 2019. The market recovery has spurred China to supply crude from its strategic reserves to local refiners in a bid to cool prices.

Prices of oil and other riskier assets tumbled earlier in the week on concerns about the economic impact of surging COVID-19 cases of the Delta variant in the United States, Britain, Japan, and elsewhere.

Benchmark contracts fell as much as $6 on Monday but have recouped all of those losses as investors expect overall crude demand to stay strong, driven by a continued fall in oil stockpiles and rising rates of vaccinations.

Demand growth is expected to outpace new supply, following the agreement by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, to add back 400,000 barrels per day each month from August through December.