|NEW YORK: Oil was little changed on Friday and logged a first weekly decline since April as new U.S. coronavirus cases spiked, stoking fears of a second wave of the virus hitting fuel demand.
Brent settled at $38.73 a barrel, up 18 cents, while West Texas Intermediate settled at $36.26 a barrel, down 8 cents. Both benchmarks logged weekly declines of about 8%, their first after six weeks of gains that have lifted prices off April lows. With about half a dozen U.S. states reporting spikes in new infections, fears that the coronavirus pandemic may be far from over has brought the rally to a halt.
“This market is at a crossroads. If demand continues to improve, the oil market has a lot more to go on the upside,” said Phil Flynn, senior analyst at Price Futures Group. “If we get into a situation where we start to take steps back with the coronavirus, the market is going to go down.”
At the same time, U.S. crude oil inventories have risen to a record 538.1 million barrels, as cheap imports from Saudi Arabia flowed into the country. The build happened despite producers from the United States, and the Organization of the Petroleum Exporting Countries (OPEC) and its allies cutting supply.
The number of U.S. crude oil drilling rigs, an indicator of future supply, fell by seven to 199 this week, oil services firm Baker Hughes said. OPEC+ slashed supplies by 9.7 million barrels per day (bpd), about 10% of pre-pandemic demand, and agreed last weekend to extend the reduction.
“While a bullish argument can still be made as production continues to decline with demand still showing improvement, we look for the down trend in output to begin slowing appreciably while demand recovery could be downsized if the coronavirus continues to ramp up,” said Jim Ritterbusch of Ritterbusch and Associates.