Oil falls on demand recovery and surging Covid-19 numbers

London — 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 fell 26c to $43.11 a barrel by 8.22am GMT. US West Texas Intermediate (WTI) crude dropped 23c to $40.52.

The US 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 oil cartel Opec and its allies (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 US 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 US supply is going to come back,” Dhar said.

Reuters