Oil prices slip as coronavirus gloom festers

Brent crude was down 0.4% at $71 a barrel on Friday

Brent crude, which has already reached a two-year high of $73 a barrel, could rise as much as $5 in the coming months, according to top oil trader Vitol. Reuters

Oil prices dropped on Friday as concerns about the patchy administration of anti-coronavirus vaccinations around the globe tempered optimism from earlier in the week.

The international crude benchmark Brent and the US oil were down 0.4 per cent at $71.02 a barrel and $68.52 a barrel, respectively.

“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 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 sign of ending soon.

Prices rose earlier this week as the Opec and its allies in the group known as Opec+ predicted demand will exceed supply in the second half of this year. Opec+ agreed on Tuesday to continue with supply restraint through July, lifting prices.

However, the slow vaccination drive 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, gold headed for its biggest weekly decline since February on investor concerns over a potential pullback in central bank stimulus.

Bullion extended a drop after tumbling 2 per cent on Thursday as the dollar and Treasury yields rose following better-than-expected US data which added to speculation the Federal Reserve may bring forward the timeline for tapering bond purchases.

Gold has wobbled after jumping the most in 10 months in May as investors weighed risks including faster inflation and the uneven recovery from the pandemic. The main focus for traders on Friday will be the US nonfarm payrolls report for May, for clues on the strength of the labour market.

* with inputs from Bloomberg