Oil futures hovered around unchanged Friday, maintaining a small weekly gain, as investors worry about the spread of the delta variant of the coronavirus that causes COVID-19, and its effect on crude demand.

“The mood has been notably more downbeat in Asia this week as virus cases continue to escalate in the region, forcing tighter restrictions to be imposed. Countries in Southeast Asia and the Pacific have been hit especially hard by the delta variant…The MSCI Asia Pacific Index excluding Japan is headed for weekly losses, while oil prices are close to wiping out their gains from earlier in the week,” said Raffi Boyadjian, lead investment analyst at XM, in a note.

West Texas Intermediate crude for September delivery
CL00,
-0.29%

CLU21,
-0.29%

fell 20 cents, or 0.3%, to $68.89 a barrel on the New York Mercantile Exchange, leaving it with a week-to-date gain of 0.9%. October Brent crude
BRN00,
-0.20%

BRNV21,
-0.20%
,
the global benchmark, was down 17 cents, or 0.2%, at $71.14 a barrel on ICE Futures Europe, on track for a weekly gain of 0.6%.

Crude lost ground Thursday after the International Energy Agency, in its monthly report, lowered its forecast for 2021 oil-demand growth, while increasing its 2022 outlook. The Organization of the Petroleum Exporting Countries left its demand outlook unchanged in its monthly report, also released Thursday, while raising its non-OPEC supply forecast.

The upshot is that the IEA and OPEC both “envisage [a] significantly oversupplied oil market next year,” said Carsten Fritsch, analyst at Commerzbank, in a note.

“The IEA and OPEC forecasts for next year make one thing clear: OPEC+ has no scope whatsoever to further increase its oil production next year if it doesn’t want to risk another oversupply and inventory build,” he said.

He noted that the IEA showed oil stocks in industrialized countries in June were 66 million barrels below the pre-pandemic five-year average. “As the oil market will be virtually balanced for the remainder of the year, destocking is probably more or less complete and stocks should have bottomed out,” Fritsch said.

Natural-gas futures were down 1.2% at $3.885 per million British thermal units, on track for a weekly fall of more than 6%. Natural gas jumped to its highest since December 2018 earlier this month, due in part to hotter-than-normal weather in North America, as well as strong global demand.

“Weather is now trending closer to normal and additional cooling degree day accumulation in the latter half of the near- term forecast appears more limited,” said Christopher Louney, analyst at RBC Capital Markets, in a note.

While that’s helped bring gas prices below $4 per million BTUs, “balances are still tight, demand is high, a production response is still lacking, and global demand for natural gas continues to impress,” he said.

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