Prices on both sides of the Atlantic are heading for their biggest weekly declines since June. Weak demand and abundant fuel supplies offset support from the weak dollar, and oil futures fell on Friday.
Brent crude LCOc1 fell 33 cents, or, 0.8% to $43.74 a barrel by 0630 GMT. The international benchmark contract has fallen 2.9% so far this week.
West Texas Intermediate (WTI) crude CLc1 futures were down 35 cents or, 0.9% to $41.02 a barrel, and set for the first weekly drop in five weeks.
Both contracts appear to be in a dangerous position right now, with robust US nonfarm payroll data expected to support them tonight. The abundant spot supplies and the strained stock market are likely to continue to erode confidence.
The volume of crude oil arriving in China, the largest crude oil importer, will slow in September, after rising for five consecutive months due to the gradual swelling of refineries’ inventories.
In the United States, refineries are unlikely to increase production soon, according to diesel inventory.
Low margins are likely to limit the crude oil rally, and further production cuts are expected in the fall to accelerate rebalancing of product stocks.
Production cuts have dropped U.S. gasoline stocks rapidly in the past two months, but the end of the high vehicle driving season could offset this situation.
Middle distillate stocks in Singapore, the oil center of Asia, also rose above nine-year highs.
Meanwhile, it is reality that rising coronavirus cases and renewed lockdowns around the world will not fuel the hopes of a drop in oil stocks for a while.