Oil prices dropped on Friday as concerns about the patchy roll-out of anti-coronavirus vaccinations around the globe tempered optimism earlier in the week that demand for fuels was recovering from the depths of the pandemic.
Brent crude was down 29 cents, or 0.4%, at $71.02 a barrel by 0057 GMT, after falling 4 cents on Thursday following a gain to the highest since May 2019. The contract is on track for a gain of nearly 2% this week.
U.S. oil also fell 29 cents, or 0.4%, to $68.52, having dropped 2 cents in the previous session, while heading for a gain of more than 2% this week.
“We continue to view oil demand recovery as largely a function of vaccinations,” JPMorgan Chase commodities analysts said in a note.
“America and Europe are well advanced in their inoculation efforts,” analysts noted, but sluggish vaccination roll-outs in developed and emerging Asian countries alike mean “there is no clear end in sight to social distancing restrictions in the region.”
More than 170 million have contracted the virus globally, while the death toll approaches 3.8 million, as the second year of the worst global health crisis in a century shows no sigh of ending soon.
Prices rose earlier this week as the Organization of the Petroleum Exporting Countries (OPEC) and its allies in the grouping known as OPEC+ predicted demand will exceed supply in the second half of 2021. OPEC+ agreed on Tuesday to continue with supply restraint through July, lifting prices.
But the slow roll-out of vaccinations and high infections in countries like Brazil and India are hitting demand prospects in the world’s high-growth markets for oil and its products.
Meanwhile U.S. crude inventories dropped more than forecast last week although fuel stocks rose, suggesting demand for end-products is not matching refinery output.