U.S. West Texas Intermediate (WTI) crude futures fell 23 cents, or 0.3%, to $71.53 a barrel, following a 2.3% gain on Thursday. WTI was headed for a 0.2% weekly loss.
Brent crude futures fell 23 cents, or 0.3%, to $73.43 a barrel, after jumping 2.2% on Thursday. For the week, Brent was set to end the week flat.
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.
However,”the threat of the Delta variant slowing down global economic recovery is far from gone,” said Vandana Hari, energy analyst at Vanda Insights.
“At the very least, the lingering concern will limit the upside in crude prices beyond current levels. At its worst, it could return to batter prices again,” said Hari.
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.
“With demand holding up, the market is starting to sense the 400kb/d increase in OPEC (OPEC+) will not be enough to keep the market balanced. Inventories continue to fall, both in the U.S. and across the OECD,” ANZ Research analysts said in a note.
Analysts who have been raising price forecasts for the rest of the year said they see rising vaccination rates limiting the impact of surging infections of the Delta variant.
“We continue to see oil prices tracking higher in H2 2021 as oil demand growth outpaces supply growth,” Commonwealth Bank commodities analyst Vivek Dhar said in a note. CBA sees Brent rising to $85 by the fourth quarter.