Oil prices inch up as demand upswing counters virus concerns
Oil prices inched up on Friday as the bullish impetus from signs of fuel demand recovery was kept in check by a rising number of new coronavirus cases in the United States and China and tentative expecations of U.S. output ticking up.
Brent crude LCOc1 futures were 38 cents higher at $41.43 at 0829 GMT. U.S. West Texas Intermediate (WTI) crude CLc1 futures were up 29 cents at $39.01.
Both contracts are on track for a weekly fall of around 1.7% after record U.S. crude inventory data dragged prices down on Wednesday. [EIA/S]
Analysts said satellite data showing a strong pick-up in traffic in China, Europe and across the United States pointed to an improvement in fuel demand.
Congestion in Shanghai in the past few weeks was higher than in the same period last year, while in Moscow traffic was back to last year’s levels, data provided to Reuters by location technology company TomTom showed.
However, there are fears a spike in COVID-19 infections in southern U.S. states could stall the demand recovery, especially as some of those states, such as Florida and Texas, are among the biggest gasoline consumers.
The global economic outlook has also worsened or at best stayed about the same in the past month, a majority of economists polled by Reuters said, and the recession underway is expected to be deeper than earlier predicted.
“It does appear the market is ignoring supply and demand fundamentals and moving on sentiment,” said Michael McCarthy, chief market strategist at CMC Markets.
The prospect of increased U.S. crude production also kept a lid on gains on Friday.
A survey of executives in the top U.S. oil and gas producing region by the Dallas Federal Reserve Bank found more than half of executives who cut production expect to resume some output by the end of July.
