Oil prices fell more than 3% on Friday. Concerns of a slow economic recovery due to the COVID-19 pandemic has raised concerns about weak oil demand, and oil recorded its biggest weekly drop since June.
Brent crude LCOc1, the international benchmark, fell $1.41, or 3.2%, to settle at $42.66 a barrel. West Texas Intermediate (WTI) CLc1 fell $1.6, or 3.9%, to settle at $39.77 a barrel.
Brent fell 5.3% from last week, while WTI lost 7.4%.
Prolonged declines in the US stock market and a report showing that employment in the US was further slowed by the end of government aid in August put pressure on prices. Employment was 11.5 million below the pre-pandemic level and the unemployment rate was 4.9 percentage points higher than in February. The unemployment rate dropped to 8.4% compared to the 9.8% forecast last month.
It is necessary to increase economic activity in line with demand flowing, so that the anticipated incentive hopes may come true. The employment figures announced are not in a position to support incentive prospects.
Official data showed that demand for domestic gasoline in the US dropped again this week, with stocks of mid-distillate in Asia’s oil hub Singapore surpassing their highest in nine years. Data on lower demand for gasoline suggest a general sense of decline in demand for petroleum products. It is said that global oil demand may drop by 9-10 million barrels per day (bpd) this year due to the pandemic.
A record supply cut by the Organization of Petroleum Exporting Countries (OPEC) and its allies known as OPEC + since May has supported prices. However, the group raised production by nearly 1 million barrels in August to ease the scale of the cuts.
In the United States, the number of oil and gas drilling rigs, an early indicator of future production, is expected to be 256, up two in the week through September 4. Energy companies have added towers for the second time in the last three weeks.