Oil set for biggest weekly loss since June

London — Oil held at about $44 a barrel on Friday and was heading for its biggest weekly decline since June, as weak demand figures added to concerns of a slow recovery from the Covid-19 pandemic.

A US government report showed domestic petrol demand fell in the latest week. Middle distillates inventories at Asia’s oil hub Singapore have soared above a nine-year high, official data showed.

Brent crude, the international benchmark, was up five US cents, or 0.1%, to $44.12 at 7.45am GMT, heading for a 2.3% drop this week. US West Texas Intermediate (WTI) fell 3c to $41.34, set for the first weekly drop in five weeks.

In focus on Friday will be US payrolls figures at 12.30pm GMT, which could be a selling trigger if an expected slowdown in hiring is steeper than forecast. The unemployment rate is expected to fall to 9.8% from 10.2%.

“Demand concerns are firmly front and centre of traders’ minds,” said Stephen Brennock of oil broker PVM. “Today’s nonfarm US payroll report will be closely watched and a disappointing number could be the next bearish catalyst.”

FGE analysts said rising coronavirus cases worldwide and renewed lockdowns would dash hopes of a drawdown in oil inventories for some time. The pressure remains on refiners to keep operating rates low, FGE said.

Oil has recovered from April, when Brent slumped to a 21-year low below $16 and US crude briefly went into negative territory. A record supply cut since May by Opec+, has supported prices.

In August, Opec began to ease the volume of the cutback, raising output by almost one-million barrels per day according to a Reuters survey. 

Reuters