MELBOURNE — Oil prices trimmed overnight gains on Friday but were poised to end the week largely steady after rebounding from a sharp drop, underpinned by expectations supply will remain tight as demand recovers.
Brent crude futures fell 7 cents, or 0.1%, to $73.72 a barrel at 0147 GMT, after jumping 2.2% on Thursday. For the week, Brent was headed for a 0.1% gain.
U.S. West Texas Intermediate (WTI) crude futures fell 8 cents, or 0.1%, to $71.83 a barrel, following a 2.3% gain on Thursday. WTI was set to end the week flat.
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.
Oil prices, along with other riskier assets, tumbled earlier in the week on concerns about the broad 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 the continued fall in oil stocks and rising rates of vaccinations.
“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.
(Reporting by Sonali Paul Editing by Shri Navaratnam)