OIL SINKS TO 3-MONTH LOWS

OIL PRICES were down for a seventh consecutive session on Friday near three-month lows and plunging to a weekly loss of over 7 percent as new lockdowns in countries facing surging cases of the Covid-19 Delta variant dampened the outlook for fuel demand.

Broader investor risk aversion also weighed on oil with the dollar jumping to a nine-month high on signs the US Federal Reserve was considering reducing stimulus this year.

“The spread of the Delta variant amid moderating economic growth and the prospects of tighter monetary policy are creating short-term ripples in the commodity market,” ANZ commodity analysts said in a note.

Brent crude fell 69 cents, or 1 percent, to $65.76 (about R994) a barrel by 3.38pm, near its lowest since May and down almost 7 percent for the week. It traded at $65.57 by 6.20pm, 99c softer.

US West Texas Intermediate crude for September, due to expire on Friday, fell 68c, or 1.1 percent, to $63.01 a barrel and was down almost 8 percent for the week.

“The latest lockdowns in major economies around the world have likely harmed the economic activities and growth forecasts in the months to come,” said Margaret Yang, a strategist at Singapore-based DailyFX.

“Japan has extended its emergency lockdown and confirmed cases are on the rise in countries such as South Korea, Malaysia, Philippines, Vietnam and Thailand, whose industries need oil, which will also be affected by the Delta variant,” Yang added.

China has imposed new restrictions with its “zero tolerance” coronavirus policy, affecting shipping and global supply chains, and the US and China have imposed tit-for-tat flight capacity restrictions.

Meanwhile, Delta variant outbreaks in Australia and New Zealand have also sparked strict lockdowns.