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Oil falls 1% on sluggish coronavirus recovery, supply concerns

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NEW YORK: Oil prices lost about 1% on Friday as the economic recovery worldwide runs into stumbling blocks due to renewed coronavirus lockdowns and on worries about rising crude supply.

The euro zone’s economic recovery from its deepest downturn on record stalled this month as pent-up demand unleashed by the easing of lockdowns in July dwindled, a survey showed. By contrast, US housing and manufacturing survey data came in better than expected.

Brent crude futures settled at $44.35 a barrel, down 55 cents, 1.2%. US West Texas Intermediate (WTI) crude futures settled at $42.34 a barrel, falling 86 cents, or 1.1%.

Brent fell about 1% for the week, while WTI saw a weekly rise of nearly 1%.

India’s crude oil imports fell in July to their lowest level since March 2010, while US motorists drove 13% fewer miles in June than a year earlier, according the US Department of Transportation.

Libya’s national oil company said it could restart oil exports after the North African country’s internationally recognized government in Tripoli announced a ceasefire, putting further pressure on oil prices.

“This is a market that can’t afford to absorb any additional barrels,” said John Kilduff, partner at Again Capital LLC in New York. “While I’m happy for them in striking a peace deal, it’s problematic for the global supply situation and so that’s a big part of today’s selloff.”

Those barrels would add to the output from OPEC+, which consists of the Organization of the Petroleum Exporting Countries and allies, including Russia. That group has been focused on ensuring members that had overproduced against their commitments would cut output.

An internal report showed the group wanted oversupply between May and July compensated for with cuts this month and next, Reuters reported.

The report also showed OPEC+ expects oil demand in 2020 to fall by 9.1 million barrels per day, and by as much as 11.2 million bpd if there is a resurgence of coronavirus infections.

The US oil and natural gas rig count, an indication of future supply, increased this week for the first time since March, energy services firm Baker Hughes Co said.

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