Oil futures: Prices eases on demand slowdown fears, Brent at $71/b

Quantum Commodity Intelligence - Crude oil futures in late afternoon European trading hours Friday were marginally lower as the market continued to absorb the downbeat demand outlook from the IEA, although markets are on course for slim weekly gains of less than 0.5%.

Front-month October ICE Brent futures were trading at $71.02/barrel (1530 GMT), compared to Thursday's settle of $71.31/b and the previous-day's London close of $71.19/b.

At the same time, September NYMEX WTI was trading $68.85/b, versus Thursday's settle of $69.09/b.

In its latest report, the IEA said it sees Q3 2021 global oil demand averaging 97.4 million bpd, compared to its July report forecast of 98.1 million bpd, a downwards revision of 700,000 bpd.

"We now estimate that demand fell in July (down 120,000 bpd m-o-m), as the rapid spread of the Covid-19 Delta variant undermined deliveries in China (down 760,000 bpd m-o-m), Indonesia (down 130,000 bpd m-o-m) and other parts of Asia," said Thursday's report.

Goldman Sachs flagged the extent of China's demand slowdown earlier in the week, saying demand will slump by around 1 million bpd for the next two months due to the zero Covid policy and mobility restrictions. However, the bank has maintained its bullish price outlook of $80/b in Q4.

Markets were also jolted this week when the US Administration called on the OPEC+ group to pump more oil, while the latest US inventory data was mostly negative for prices. 

Despite the negative indicators, the market has broadly maintained the upwards momentum since rebounding from the steep drop on Monday, which came as China rolled out lockdowns across the country.  

Brent settled last Friday's at $70.70/b but hit an intraday low of $67.60/b Monday, a drop of more than 4%.

WTI settled last Friday at $68.28/b, reaching a weekly low of $65.15/b on Monday.