Oil falls below $43 on virus fears, still heads for weekly gain
Oil fell below $43 a barrel on Friday as a resurgence of coronavirus cases raised concern that fuel demand growth could stall, although crude was still headed for a weekly gain on lower supply and wider signs of economic recovery.
The United States reported more than 55,000 new coronavirus cases on Thursday, a new daily global record for the pandemic. The rise in cases suggested U.S. jobs growth, which jumped in June, could suffer a setback.
Brent crude LCOc1 was down 52 cents, or 1.2%, at $42.62 a barrel as of 0805 GMT, and U.S. West Texas Intermediate (WTI) crude CLc1 fell 50 cents, or 1.2%, to $40.15.
“The fragile U.S. economic rebound is at risk of being undone by the latest surge in new infections,” said Stephen Brennock of oil broker PVM.
Both benchmarks rose more than 2% on Thursday, buoyed by strong U.S. June jobs figures and a drop in U.S. crude inventories. [EIA/S] Brent is still heading for a weekly gain of more than 5%.
Signs of economic recovery, and a drop in supply after a record supply cut by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, have helped Brent more than double from a 21-year low below $16 reached in April.
Boosting recovery hopes, a private survey showed on Friday that China’s services sector expanded at the fastest pace in over a decade in June.
OPEC oil production fell to its lowest in decades in June [OPEC/O] and Russian production has dropped near its OPEC+ target.
The bankruptcy filing of U.S. shale pioneer Chesapeake Energy also supported prices by raising expectations production will decline, JBC Energy said in a report.
Gasoline demand will be closely watched as the United States heads into the July 4 holiday weekend. U.S. gasoline stocks USOILG=ECK rose by 1.2 million barrels last week.
