London — The Brent benchmark oil price held above $70 a barrel on Friday, broadly shrugging off a warning from the International Energy Agency that the spread of coronavirus variants is slowing oil demand growth.
Brent crude was down 18 cents, or 0.2%, at $71.13 a barrel by 1332 GMT. U.S. crude lost 14 cents, or 0.2%, to trade at $68.95. Over the week the benchmarks are up less than 1%.
The IEA this week highlighted that growth in demand for crude oil ground to a halt in July and is set to rise at a slower pace over the rest of 2021 because of surging infections from the Delta variant of the coronavirus.
Banks have also lowered their near-term demand forecasts.
“We now see the global demand recovery stalling this month with oil demand only reaching 98.3 million barrels per day (bpd) in August and averaging 97.9 million bpd in September, on par with the nearly 98 million bpd average in July,” JPM Commodities Research said.
Similarly, Goldman Sachs has reduced its estimate for the global oil deficit to 1 million bpd from 2.3 million bpd in the short term, citing an expected decline in demand in August and September.
Looking beyond the near-term risks from the Delta variant, Goldman expects the demand recovery to continue alongside rising vaccination rates.
In sharp contrast, the Organization of the Petroleum Exporting Countries (OPEC) on Thursday stuck to its forecasts for a rebound in global oil demand this year and further growth in 2022, notwithstanding the rising concern over surges in COVID-19 infections.
But OPEC also raised its expectations for supplies next year from other producers, including U.S. shale drillers, which could hamper efforts by the producer group and allies to achieve a balanced market.
“The IEA/OPEC duo are far from being unanimous when it comes to the oil demand front. However, one area in which they find common ground is the reducing demand for OPEC crude,” PVM analysts said in a note.
*Aaron Sheldrick & Florence Tan, Editing: David Goodman & Jane Merriman – Reuters