Oil prices slip amid uncertainty about fuel demand, rising output

Oil prices slipped on Friday amid growing uncertainty about the recovery in fuel demand as
coronavirus cases surged in several countries, while major crude producers prepared to lift output.

Brent crude futures fell 32 cents to $43.05 a barrel by 1122 GMT. U.S. West Texas Intermediate (WTI) crude dropped 25 cents to $40.50. Both contracts were on track to remain broadly flat over the week.

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 benchmark crudes had fallen 1% on Thursday after the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, agreed to trim 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 because Iraq and other countries, which produced more than their quota from May to July, would make extra cuts in August and September, said Vivek Dhar, commodities analyst at Commonwealth Bank of Australia.

“With more production coming online from August, a dip in demand can really play a pivotal role in pushing recovering prices back to lower levels,” said Rystad oil markets analyst Louise Dickson.

“At this stage it looks like a quick demand recovery this year is not really on the table any more, and with it a quick price recovery,” she said.