Oil prices slip amid uncertainty over fuel demand, easing supply curbs

Oil prices slipped on Friday amid growing uncertainty about the global recovery in fuel demand as coronavirus cases surged in several countries, while major producers were set to ease output curbs.

Brent crude futures LCOc1 fell 26 cents to $43.11 a barrel by 0822 GMT. U.S. West Texas Intermediate (WTI) crude CLc1 dropped 23 cents to $40.52.

The United States reported at least 75,000 new COVID-19 cases on Thursday, a daily record. Spain and Australia reported their steepest daily jumps in more than two months, while cases continued to soar in India and Brazil.

Surges in coronavirus infections are slowing a recovery in fuel use and raising concern that it could be years before consumption rebounds from the impact of the pandemic.

The two benchmark crudes fell 1% on Thursday after the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, agreed to trim their record supply cuts of 9.7 million barrels per day (bpd) by 2 million bpd, starting in August.

The actual rise would be closer to 1 million bpd, as Iraq and other countries, which produced more than their quota from May to July, make extra cuts in August and September, said Vivek Dhar, commodities analyst at Commonwealth Bank of Australia.

Analysts expect prices to remain in the $40 to $45 range, kept in check by the return of some U.S. supply and uncertainty about the impact of new lockdowns on fuel demand.

“The problem with the market right now is prices have got to a level where we’re concerned U.S. supply is going to come back,” Dhar said.

Reuters