Oil followed European markets lower on Friday as the demand impact of the coronavirus pandemic continues to cap price gains.
Futures were down one per cent in New York, mirroring a drop in stock markets, as the U.K. placed new rules on arrivals from some countries. It’s the latest measure that shows the potential for a patchy recovery in oil products consumption, underscored by the International Energy Agency’s downward revision to the majority of its demand forecasts for the next 18 months in its most recent report.
Despite Friday’s losses, crude is set to eke out a small weekly gain following a slew of encouraging data on U.S. crude stockpiles, gasoline consumption and refinery activity. Though many, including the IEA, expect the oil market to tighten for the rest of the year, flare ups in the virus are stymieing the resurgence of demand and gasoline production in Europe is currently unprofitable.
At the same time, OPEC+ is slowly adding some supply back to the market and will hold a committee meeting next week.
“The uncertainty over future demand, coupled with rising production, will make it challenging to restore the balance on the oil market,” said Eugen Weinberg, head of commodities research at Commerzbank AG.
- West Texas Intermediate for September delivery fell one per cent to $41.82 a barrel as of 10:19 a.m. in London
- Brent for October settlement lost one per cent to $44.50
China’s economic recovery continued in July, with industry growing at the same pace as June due to overseas demand, according to data released Friday. Consultants are expecting the world’s biggest importer to boost its purchases for later in the year, potentially adding support to crude.
The OPEC+ producer bloc has delayed its Joint Ministerial Monitoring Committee by a day to Aug. 19 due to Russian Energy Minister Alexander Novak’s schedule, according to delegates. Novak said the market is stabilizing and there’s no need to ease OPEC+ output cuts ahead of time, Tass news agency reported.
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