Oil gives up weekly gains on doubt about demand recovery

London — Oil slipped further below $45 a barrel on Friday, giving up this week’s gains, under pressure from doubts about demand recovery due to the coronavirus pandemic and rising supply.

Two prominent forecasters, the International Energy Agency and Opec, trimmed their 2020 oil demand forecasts this week. Opec and its allies are increasing output in August.

“Pessimism about this year’s oil demand growth prospects is due to the weakening outlook in the coming months,” said Stephen Brennock of oil broker PVM. “To make matters worse, global oil supply is on the upswing.”

Brent crude was 29 US cents, or 0.7%, lower at $44.67 by 8.10am GMT, heading for a flat week. US West Texas Intermediate slipped 25c, or 0.6%, to $41.99.

“Although both contracts continue to consolidate at the upper end of their two-month trading ranges, they lack the momentum to stage meaningful rallies at this stage,” said Jeffrey Halley of brokerage Oanda.

Prices had been bolstered this week by US government data showing crude oil, petrol and distillate inventories all fell last week as refiners ramped up production and demand for oil products rose.

Oil has recovered from lows touched in April, when WTI briefly turned negative. Still, a rise in the number of coronavirus infections has limited gains. India reported another record daily rise in cases on Thursday.

Opec and allies including Russia, a group known as Opec+, have cut output since May by about 10% of pre-pandemic global demand to support the market. The deal calls for an increase in output this month as demand recovers.

An Opec+ panel meets next week to review the market and is not expected to tweak the agreement.

Reuters