Oil prices edge higher after sell-off driven by demand concerns

Oil prices rose slightly on Friday in a volatile session, following a big sell-off the previous day as a new wave of infections across Europe triggered fresh lockdowns and dampened hopes of any imminent recovery in fuel demand.

Brent crude was up 31 cents, or 0.5 per cent, at $63.59 a barrel by 8:20 pm (IST). West Texas Intermediate (WTI) U.S. crude rose 37 cents, or 0.6 per cent, to $60.37. Both traded within a wide range of more than $2 a barrel on Friday.

Oil had closed about 7 per cent down on Thursday as several large European economies reimposed lockdowns and vaccination programmes were slowed by distribution issues and concerns over potential side effects.

“Concerns are rapidly growing of a mobility-depressing third wave in Europe amid a pause in vaccinations and rapid spread of the B117 mutation that originated in the UK,” JP Morgan said. 

Goldman Sachs said headwinds related to the EU’s demand and Iran’s supply would slow the oil market rebalancing by 750,000 barrels per day in the second quarter, though it expects the OPEC+ grouping, along with its allies, to take action to offset the impact of the same.