Oil Heads for Biggest Weekly Loss Since March on Virus Comeback

At the same time, crude markets face the prospect of extra supplies from the OPEC+ coalition, as the United Arab Emirates and Saudi Arabia repair a rift that has stymied the group’s decision-making process. A stronger dollar has also dimmed the appeal of commodities priced in the U.S. currency this week.

Amid the concerns over demand, the structure of U.S. crude prices has faltered. While there’s still a premium on the most immediate contracts — a condition known as backwardation that signals tight supplies — it has eased significantly in some parts of the forward curve. The prompt premium stands at just 22 cents a barrel, from 75 cents a week ago.

“Oil prices have been under pressure,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “We could quickly end up with too much oil being placed on the market.”

Still, crude has rallied almost 50% this year as the vaccine rollout helps restore economic activity, and forecasters from the International Energy Agency to Citigroup Inc. predict that the market will get tighter in coming months. The Organization of Petroleum Exporting Countries itself expects the recovery in demand for its crude will continue into next year.

See also: Key Oil Spread Falls Amid OPEC+ Output Deal Uncertainty: Chart