U.S. oil set for biggest weekly loss since October as Delta variant fans demand worries

SINGAPORE (Reuters) – U.S. crude oil futures were on track for their biggest weekly decline since late October on Friday, with prices coming under pressure as top consumers impose travel restrictions amid the spread of the Delta variant of the coronavirus.

However, rising tensions in the Middle East provided a floor under the market.

U.S. West Texas Intermediate (WTI) crude futures have dropped 6.6% this week, the biggest weekly loss since the end of October. The market was unmoved at $69.09 a barrel, as at 0038 of GMT.

Brent crude oil futures have given up 6.6%, the most since mid-March and prices were down 2 cents at $71.27 a barrel on Friday.

“Oil has been under pressure this week as moves to reinstate travel restrictions in China reflected the situation across Asia,” ANZ said in a report.

“At least 46 cities have advised against traveling, and authorities have suspended flights and stopped public transport. This could impact oil demand as it comes towards the end of the summer travel season.”

Japan is poised to expand emergency restrictions to more prefectures while China, the world’s second-largest oil consumer, has imposed curbs in some cities and canceled flights, threatening fuel demand.

In the United States, daily new COVID-19 cases have climbed to a six-month high, with more than 100,000 infections reported nationwide as the Delta variant ravaged Florida and other states with lower vaccination rates.

Worries over rising tensions between Israel and Iran limited the decline in prices.

Israeli jets struck what its military said were rocket launch sites in Lebanon early on Thursday in response to two rockets fired towards Israel from Lebanese territory, in an escalation of cross-border hostilities amid heightened tensions with Iran.

The exchange came after an attack on a tanker off the coast of Oman last Thursday, which Israel blamed on Iran. Two crew members, a Briton and a Romanian, were killed. Iran denied any involvement.

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