Oil prices rose on Friday, but may be closed with a weekly drop due to growing concerns about the impact of the widespread boom in coronavirus infections caused on fuel demand, and the return of exports from Libya.
Brent crude LCOc1 was up 30 cents at $42.24 a barrel by 0855 GMT, while West Texas Intermediate (WTI) crude CLc1 rose 23 cents to $40.54.
Brent is moving forward this week with a drop of about 2% and WTI crude oil about 1%. Both indicators are heading for monthly declines, which will be the first for Brent in six months.
This month hasn’t worked on oil. Rising infections, renewed lockdowns, slowing economic recovery, and paused US stimulus talks curbed the fragile recovery in fuel demand.
In the United States, where the coronavirus epidemic has the highest mortality rate and is the world’s largest oil consumer, last week’s unexpectedly rising unemployment claims show that the worsening economic recovery has reduced fuel demand. While the epidemic restricts travel, fuel demand suffers. The four-week average of gasoline demand last week was 9% lower than the previous year, according to government data on Wednesday.
Also on other parts of the world, daily increases in coronavirus infections are breaking records. It is very likely that new restrictions have come or are coming will limit travel and therefore fuel demand.
In India, fuel demand is falling as rising coronavirus cases hinder industrial and transportation activities. Crude oil refineries’ business volume fell 26.4% year-on-year, breaking a record in the last four months.
An oil tanker has been loaded from Libya recently, and more cargo is expected to be received in the coming days. However, there is still no prediction as to how quickly the country can increase supply.