Oil edged higher after eking out a modest weekly gain as investors assessed the outlook for demand amid a Covid-19 resurgence.
Futures in New York traded above $72 a barrel after adding 0.4% last week, the first weekly gain in three. There are robust signs that demand for fuels such as gasoline has increased as vaccination programs are rolled out, although the fast-spreading delta variant has raised concerns about the short-term outlook. Tight restrictions have been renewed including curfews in some places.
The latest Covid-19 flare-up coincided with a salvaged OPEC+ agreement to add more barrels from August, whipping up stiff headwinds for oil and interrupting a price rally. However, expectations are for a continuing tightening of the market throughout the rest of 2021, leading to even higher prices.
The prompt timespread for Brent was 65 cents a barrel in backwardation — a bullish market structure where near-dated prices are more expensive than later-dated ones. That compares with 66 cents on Friday.
Countries including Thailand and Vietnam are imposing curfews in cities to battle a surge in Covid-19 cases, while in Germany, senior politicians have floated the possibility of tough restrictions for the unvaccinated. The top U.S. infectious disease expert, Anthony Fauci, warned that the nation is moving in the “wrong direction” in combating the new wave of the pandemic.