Oil dips as Covid-19 numbers likely to slow demand recovery

London — Oil dipped to about $45 a barrel on Friday on worries that a demand recovery would slow due to a resurgence of coronavirus cases, though a pledge from oil cartel Opec member Iraq to cut oil output further in August lent support.

The resurgence of infections remains a key issue for the market and demand outlook. Tallies show cases in the US are rising in a number of states. India reported a record daily jump in infections on Friday.

Brent crude fell 13c, or 0.3%, to $44.96 by 8.20am GMT. US West Texas Intermediate (WTI) crude also slipped 13c to $41.82.

Traders were also watching talks in the US over the next coronavirus stimulus package. Democratic leaders in the US Congress and top aides to President Donald Trump failed to make substantial progress on Thursday.

“Hopes are still running high for another round of fiscal stimulus,” said Stephen Brennock of oil broker PVM. “Failure to extend aid would deal a massive blow to the recovering US economy and the fragile oil demand outlook.”

Brent and WTI are set for weekly gains of about 4%. Prices have recovered from lows reached in April, when Brent slipped below $16, a 21-year low, thanks in part to a record deal on supply cuts by Opec and its allies (Opec+).

Saudi Arabia’s energy minister and his Iraqi counterpart stressed their countries’ full commitment to the deal, Iraq’s state news agency said on Friday.

Iraq has been a laggard in fully meeting its pledge.

Over the week, a weaker dollar helped support prices by making the commodity more attractive to buyers holding other currencies. The dollar index, up on Friday, is expected to weaken ahead of US non-farm payrolls figures later in the day that is forecast to show job creation slowed in July.

Reuters