Oil prices fall, but on track for weekly gain

Oil prices fell on Friday but remained on track to post weekly gains with demand growing faster than supply, while vaccinations are expected to alleviate the impact of a resurgence in Covid-19 infections across the globe.

Brent crude futures for September, which expire on Friday, had dropped $0.06, or 0.1%, to $75.99 a barrel by 1103 GMT, following a 1.75% jump on Thursday.

The more active Brent contract for October was down $0.2, or 0.3% to $74.90 per barrel.

US West Texas Intermediate (WTI) crude futures fell $0.2, or 0.3%, to $73.42 a barrel, whittling down a 1.7% rise from Thursday.

But both benchmark contracts were headed for gains of around 2% for the week.

Even with coronavirus cases rising in the United States, all around Asia and parts of Europe, analysts said higher vaccination rates would limit the need for the harsh lockdowns that gutted demand during the peak of the pandemic last year.

"The oil market no longer appears to be viewing the issue of the Delta variant with quite the same alarm as it was at the beginning of last week," said Commerzbank analyst Carsten Fritsch.

"There is confidence that the ongoing vaccination campaigns in the industrialised countries will prevent any reintroduction of widespread mobility restrictions," he added.

Analysts also point to a rapid rebound in India's gasoline consumption and industrial production following its Covid-19 surge earlier this year as a sign that economies are more resilient to the pandemic.

"Delta is a risk, but is it going to derail demand growth in the second half? We may not see that," said Commonwealth Bank commodities analyst Vivek Dhar.

Oil prices will trade near $70 per barrel for the rest of the year supported by the global economic recovery and a slower-than-expected return of Iranian supplies, with further gains limited by new coronavirus variants, a Reuters poll showed. 

Top oil exporter Saudi Arabia is expected to raise prices across various grades of crude oil it sells to Asia in September for a second straight month, tracking the strength in Middle East benchmarks, trade sources said.