Oil slips below $45/bbl on demand concerns but posts weekly rise
NEW YORK: Oil prices fell nearly 2% on Friday, limiting their weekly gain due to concerns the global recovery could falter from a resurgence of coronavirus cases.
The rise in infections remains the dominant issue for the fuel demand outlook. Cases in the United States are still rising in a number of states, while India recently reported a record daily jump in infections. More than 700,000 people have died in the worldwide pandemic.
Brent crude fell 69 cents, or 1.5%, to settle at $44.40 a barrel. U.S. West Texas Intermediate (WTI) crude fell 73 cents, or 1.7%, to end at $41.22 a barrel.
Brent rose 2.5% for the week, while WTI gained 2.4%.
Talks between U.S. lawmakers over another round of stimulus have stalled, meanwhile. U.S. President Donald Trump has threatened to pull White House representatives out of talks and instead issue executive orders to address economic needs.
“The U.S. Congress can’t seem to come up with a plan for the next round of stimulus and it’s creating doubt for U.S. economic recovery,” said Gary Cunningham, director of market research at Tradition Energy.
OPEC member Iraq pledged to cut output further in August, which helped support prices. The nation has been a laggard in fully meeting its pledge as part of an April deal to reduce supply.
Crude has recovered from lows reached in April, when Brent slipped below $16, a 21-year low.
“Keeping the price levels would be unrealistic,” Bjornar Tonhaugen of Rystad Energy said of this week’s rise. “Traders rushed to the task today to correct the gains, remembering the invisible enemy, COVID-19.”
U.S. non-farm payrolls for July came in slightly better than expected, but still showed employment growth slowed. U.S. Democratic leaders said the jobs report showed more investments were needed.
U.S. energy companies cut the number of oil and natural gas rigs this week to a record low for a 14th week. U.S. oil rigs fell by four to 176 this week, their lowest since July 2005, according to data from energy services firm Baker Hughes Co (BKR.N).
Money managers raised their net long U.S. crude futures and options positions in the week to Aug. 4 by 8,096 contracts to 368,643, the U.S. Commodity Futures Trading Commission (CFTC) said.