MOSCOW (MRC) -- Crude oil futures were lower during midmorning Asia trade Aug. 13 as pandemic concerns continued to keep prices in check, with the sentiment also taking a hit after the International Energy Agency (IEA) said global oil demand recovery had reversed its course in July, reported S&P Global.
At 11:15 am Singapore time (0315 GMT), the ICE October Brent futures contract was down 48 cents/b (0.67%) from the previous close at USD70.83/b while the NYMEX September light sweet crude contract was down 51 cents/b (0.74%) at USD68.58/b.
The spread of the delta variant of the coronavirus can potentially jeopardize the global economic recovery and sap demand for oil and energy, analysts said.
Parts of major Asia-Pacific regional economies, including India, China and Australia, have imposed mobility restrictions in a bid to curb infection numbers. The market is particularly concerned about the world's second largest oil consumer China, which is currently dealing with its broadest outbreak since 2019.
"Crude oil fell as concerns of weaker demand amid the spreading Delta variant grew. A COVID-zero approach by Chinese authorities has seen strict guidelines on movement," ANZ analysts said in an Aug. 13 note.
The situation was also grim in the West, with COVID-19 infection numbers in the US and countries in Europe remaining elevated.
The delta variant has spread so rapidly in the US that the Centers for Disease Control and Prevention said more than 90% of the counties are experiencing substantial or high transmission rates. The seven-day moving average of infections in the US has surged to 124,234 as of Aug. 11, the highest since early February, data from The New York Times showed.
Amid rising infection numbers, the IEA said in its latest oil market report released Aug. 12 that the global oil demand recovery went into reverse in July, when oil demand fell by 120,000 b/d. In the report, the agency lowered its estimate for 2021 demand growth to 5.3 million b/d from 5.4 million b/d, while raising its 2022 growth estimate to 3.2 million b/d from 3 million b/d.
As MRC informed earlier, crude oil stockpiles fell modestly last week, while gasoline inventories dipped to their lowest level since November, according to the US Energy Information Administration. Crude inventories fell by 447,000 barrels in the week to Aug. 6 to 438.8 million barrels, compared with analysts' expectations in a Reuters poll for a 1.3 million-barrel drop. Overall crude inventories have been on the decline for several weeks due to increased demand.
We remind that US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, the US Energy Information Administration (EIA) said in a monthly report, a smaller decline than its previous forecast for a drop of 210,000 bpd.
We also remind that BP raised Aug. 3 its 2025 oil price assumption by USD5/b to USD60/b to reflect an expected supply constraint, while promising a recovery in its own production volumes following a maintenance-related slump in the second quarter.