Oil fell amid ongoing COVID outbreaks in several countries

Oil declined Friday morning in Asia, with the slow rollout of coronavirus vaccines and the ongoing COVID-19 outbreaks in several countries casing a shadow over the fuel demand outlook.

Brent oil futures dropped by 0.13% and settled at $71.22, and WTI futures dipped 0.07% to $68.76.

The U.S. Energy Information Administration’s Crude oil supply data showed a draw of 5.080 million barrels in the week to May 28. The draw was bigger than the forecast.

Meanwhile, the American Petroleum Institute’s crude oil supply data published a day before showed a draw of 5.360 million barrels.

According to JPMorgan Chase commodities analysts, we continue to view oil demand rebound as largely a function of vaccinations.

However, commodities analysts also added that the slow rollout of coronavirus vaccinations in developed and emerging Asian countries alike means there is no clear end in sight to social distancing restrictions in the region.

OPEC+ announced fuel demand will surpass supply in the second half of 2021

Earlier this week, the Organization of the Petroleum Exporting Countries and its allies, the group known as OPEC+, announced that fuel demand will surpass supply in the second half of 2021. The cartel also agreed at its meeting on June 1 to continue with supply restraint through July, lifting oil prices. But, it didn’t give any hints on future supply policy.

According to Gazprom Neft PJSC Chief Executive Officer Alexander Dyukov, OPEC+ may need to keep rising fuel supply in August or September to meet the demand recovery.

Significantly, other investors remained more optimistic.

Dominic Schnider is head of commodities and Asia Pacific foreign exchange at UBS Global Wealth Management. This week he announced that the market can easily absorb the incremental supply from OPEC+. Schnider also reported that the resurgence of coronavirus infections in parts of Asia is unlikely to derail global recovery.