Oil futures: Brent edges sideways Friday, ends flat on the week

23 Jul 2021

Quantum Commodity Intelligence – Crude oil futures were little changed after the US market opened Friday, as the market consolidated gains from the previous two sessions.

Front-month September Brent futures were trading at $73.88/barrel (1437 GMT), compared to Thursday’s settle of $73.79/b and broadly unchanged on the week.

At the same time, September WTI was trading at $71.89/b, largely flat to Thursday’s settle of $71.91/b.

Focus has returned to supply/demand fundamentals and the likely deficit for the remainder of the year, which has been flagged in a number of bank forecasts this week.

“There was little fundamental justification for Monday’s pronounced price slide, despite the concerns about the pandemic, and prices should therefore recover rapidly.” said Commerzbank in an investor note.

“The oil market is likely to remain undersupplied if anything even after the OPEC+ production hikes that will be implemented until year’s end.”

The Delta variant is seen as the main barrier to economic and oil demand growth, but so far demand is seen holding up in most regions.

“Investors were buoyed by signals of robust demand despite rising COVID-19 case numbers. Gasoline demand in several major regions has returned to pre-pandemic levels amid rising road traffic data,” said Daniel Hynes, senior commodity strategist at ANZ on the price rebound.

Earlier in the week, Goldman Sachs said it expects the Delta variant will only impact demand by a maximum of 1 million bpd ‘for a couple of months’.