Oil prices edge lower, on track for small weekly loss

Oil futures edged lower Friday and remained on track for a weekly loss, but have bounced significantly following a Monday rout.

West Texas Intermediate crude for September delivery

fell 19 cents, or 0.3%, to $71.72 a barrel on the New York Mercantile Exchange, leaving the U.S. benchmark on track for a 0.1% weekly loss.

September Brent crude

the global benchmark, was off 26 cents, or 0.4%, at $73.53 a barrel on ICE Futures Europe, leaving it down less than 0.1% for the week.

Crude plunged Monday, with WTI dropping more than 7%, in a broad selloff that was attributed in part to worries about the spread of the delta variant of the coronavirus and it’s impact on energy demand. Crude and other assets, including equities, subsequently bounced back as investors proved eager to buy the dip.

The market’s rebound “confirms our hypothesis that the selloff was ultimately sparked by external factors,” said Eugen Weinberg, commodity analyst at Commerzbank, in a note.

Weinberg said it also backs up the expectation that an agreement by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to add 400,000 barrels a day each month to output as it unwinds production curbs will prevent a repeat of last year’s breakdown in the cartel.

“ The supply situation remains tight, while the agreement underlines the unity of OPEC+, and the response of non-OPEC+ producers so far to the significantly higher prices leaves much to be desired.,” he wrote. “This suggests that OPEC+ will maintain its ‘pricing power,’ which will lead to high prices.”

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