Oil falls on resurgence of virus cases
Oil prices dropped on Friday and were headed for weekly declines as inventories rose and record-breaking new coronavirus cases in the United States stoked concern about the pace of economic recovery and fuel demand.
Brent crude was down by 71 cents, or 1.7%, at $41.64 a barrel by 0859 GMT, and U.S. oil fell 77 cents, or 1.9%, at $38.85 a barrel.
Brent looks set for a weekly decline of nearly 3% and U.S. crude for a fall of around 4.5%.
More than 60,500 new COVID-19 cases were reported in the United States on Thursday, setting a daily record. The tally was also the highest daily count yet for any country since the pathogen emerged in China late last year.
“Further job losses are on the horizon as several states reimpose lockdown restrictions. America is still in the throes of the pandemic and this spells bad news for the oil demand outlook,” said Stephen Brennock of oil broker PVM.
In Australia, the government on Friday will consider reducing the number of citizens allowed to return to the country from overseas, after authorities ordered a new lockdown of the country’s second-most populous city, Melbourne.
The International Energy Agency (IEA) bumped up its 2020 oil demand forecast on Friday, but warned that the spread of COVID-19 posed a risk to the outlook.
“While the oil market has undoubtedly made progress … the large, and in some countries, accelerating number of COVID-19 cases is a disturbing reminder that the pandemic is not under control,” the IEA said.
Oil inventories remain bloated due to the evaporation of demand for gasoline, diesel and other fuels during the initial outbreak.
“If we take a bigger picture view of the market, what stands out to us is that we have not yet seen much of a decline on the global inventory front,” JBC said.
U.S. crude oil inventories rose by nearly 6 million barrels last week after analysts had forecast a decline of just over half that figure.
The rising tension between the United States and China also put pressure on prices. China said on Friday it would impose reciprocal measures in response to U.S. sanctions on Chinese officials over alleged human rights abuses against the Uighur Muslim minority.
Source: Reuters (Reporting by Bozorgmehr Sharafedin, Additional reporting by Aaron Sheldrick in Tokyo; editing by Emelia Sithole-Matarise)