After soaring in the first half of the year surging demand, the latest chapter in the pandemic has capped prices of not just oil but some other commodities as well. Investors are awaiting a key U.S. jobs report later Friday for clues on how long the Federal Reserve will continue its stimulus measures.
“Oil market has struggled this week,” said Jens Naervig Pedersen, a senior analyst at Danske Bank A/S. “On the one hand, markets worry about economic implications of the spreading of the delta variant, but on the other, policy accommodation gives a strong backdrop.”
Despite the weak outlook for demand from Asia, there are some improved metrics in the U.S., where roads have remained busy. Vehicle miles traveled on highways in the week to Aug. 1 match the similar week in 2019, before the pandemic hit, according to the Department of Transportation. Gasoline deliveries to the Spanish market jumped above pre-pandemic levels last month
“It’s hard to not get caught up in the headlines showing rising cases, particularly in China,” said Daniel Hynes, senior commodities strategist at Australia and New Zealand Banking Group Ltd. “However, when you take a step back, restrictions are still being eased back across most regions, demand seems to be holding up, and I think the impact on this latest wave should be significantly less than previous ones.”