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Oil futures lost ground Friday as the number of COVID-19 cases continues to rise in the U.S. and around the world, adding to uncertainty over the outlook for crude demand.,
Futures on West Texas Intermediate crude for August delivery CL.1, -0.78% on the New York Mercantile Exchange were down 24 cents, or 0.6% at $40.52 a barrel. September Brent crude BRN.1, -0.89%, the global benchmark on ICE Europe.were down 31 cents, or 0.7% at $43.06 a barrel.
“Risks remain on the demand side because renewed lockdowns are possible and demand may rise more slowly than anticipated as a result of the recession and changed consumer behavior,” wrote analysts at Commerzbank, in a note.
The number of confirmed cases of COVID-19 world-wide rose to 13.6 million on Thursday, after a record of about 230,400 new infections were counted on Wednesday, according to data compiled by Johns Hopkins University. The U.S. saw 66,300 new cases on Wednesday, just below the record of more than 67,000 cases reported on Tuesday.
For the week, WTI is off around 0.1%, while Brent is down 0.4%, with both grades largely holding their ground as the Organization of the Petroleum Exporting Countries and its allies agreed Wednesday to begin tapering production cuts next month.
“At least for now the market seems comfortable that an OPEC+ tapering of cuts by 2 million barrels a day to 7.6 million barrels a day from August will not overwhelm demand recovery, and compensation by early period cheaters will help in that regard,” said Jason Gammel, analyst at Jefferies, in a note.
“OPEC+ discipline has been strong and if a COVID second wave reverses demand gains we expect the group will then take incremental oil out of the market. We also expect US production declines to continue given low activity levels,” he said, noting that Jefferies raised its second-half 2020 Brent forecast to $43 a barrel from $37 a barrel, while leaving its 2021 and 2022 forecasts unchanged at $48 a barrel and $55 a barrel, respectively.
