Oil ended the week nearly flat as prices fell amid rising cases of the Covid-19 Delta variant and the closure of one of China's busiest ports as the US called for Opec to increase supply.
Brent, the international benchmark, and West Texas Intermediate, the main US gauge, rose marginally by around 0.2 per cent each for the week.
On Friday, Brent settled 1.01 per cent lower at $70.59 per barrel on Friday, while WTI fell 0.94 per cent to close at $68.44 per barrel.
Growing concerns over the potential of Delta-variant Covid-19 cases curbing global demand for crude also underpinned the weak market sentiment.
The world's largest crude buyer, China, closed one of its busiest terminals, Meishan, at the Ningbo-Zhoushan port after one positive Covid case. Ningbo-Zhoushan is the world's third-busiest container port. China, where the coronavirus was first detected, has a zero Covid-19 tolerance policy, shutting down major residential and commercial centres to contain outbreaks when cases are detected.
“News of the port closure has been a drag on oil prices, with crude turning south yesterday just as it was heading for the third day of gains,” said Craig Erlam, senior market analyst at Oanda Europe.
“But the prospect of further strict shutdowns in China at the slightest hint of a breakout will have implications for growth in the world's second-largest economy and largest importer in the near term. The outbreak in China, irrespective of how small the numbers currently appear, is a key catalyst behind crude prices tumbling from their highs again,” he added.
To stimulate demand and provide a buffer to high domestic petrol prices, US National Security Adviser Jake Sullivan urged Opec and its allies to increase supply.
“Higher gasoline costs, if left unchecked, risk harming the ongoing global recovery. The price of crude oil has been higher than it was at the end of 2019, before the onset of the pandemic,” he said in a statement on Wednesday.
Opec+, the super group led by Saudi Arabia and Russia, is bringing 2 million barrels per day back to the market by the end of the year, with 400,000 bpd being added in August.
“While Opec+ recently agreed to production increases, these increases will not fully offset previous production cuts that Opec+ imposed during the pandemic until well into 2022,” Mr Sullivan said.
“At a critical moment in the global recovery, this is simply not enough,” he added.
Opec+ has not responded directly to the White House's request to increase supply.
Opec left its demand forecast for 2021 unchanged in its latest oil market report released on Thursday.
Oil demand is forecast to grow at 6 million bpd with total consumption expected to hit 96.6 million bpd, according to Opec.
The International Energy Agency, however, slashed its demand forecast by 500,000 bpd for the second half of 2021 as Covid-19 infections continue to rise.
Global oil demand is now expected to rise 5.3 million bpd on average to 96.2 million bpd in 2021, and a further 3.2 million bpd in 2022, according to the Paris-based agency.
Demand is also softening due to higher inflation in the US, the world's biggest economy. Inflation continued to rise, reaching a 13-year high in July, and hitting 5.4 per cent.
Consumer sentiment also fell to the lowest level seen since 2011, as an index by the University of Michigan declined to 70.2 in August. The gauge is 13 per cent lower than its July reading.
The key consumer sentiment reading fell below the threshold of 71.8, recorded in April 2020 at the height of the Covid-19 demand crunch.
Global oil demand looks delicate as cases fuelled by the rapidly spreading Delta variant continue to rise.
The total number of Covid-19 cases are above 207 million, with more than 4.3 million deaths registered as of Saturday, according to Worldometer, which tracks the pandemic.