Oil prices dropped on Friday. Despite the large producers deciding to ease production cuts, the rise of new COVID-19 cases in many countries has led to increased uncertainties about global recovery.
Brent crude futures LCOc1 fell 11 cents, or 0.3%, to $43.26 a barrel by 0610 GMT, and West Texas Intermediate (WTI) crude CLc1 dropped 4 cents, or 0.1%, to $40.71.
On Thursday, the U.S. announced at least 75,000 new cases of COVID-19 daily. Spain and Australia reported their steepest daily leaps in more than two months, cases in India and Brazil continue to rise and restriction measures are being increased.
Increases in coronavirus infections have slowed the recovery in fuel use after alleviating the crashes relating to the first wave in the United States and other countries. It seems that it is unlikely reaching in a short while to the consumption levels before the pandemic.
After the Organization of Petroleum Exporting Countries (OPEC) and OPEC + agreed and applied to make a record cut of 9.7 million barrels (bpd) per day in May, June and July, they took a decision on Thursday, to decrease 2 million barrels a day starting by August. The two benchmark contracts (Brent, WTI) fell 1%.
These measures give the market confidence that OPEC is doing its job right.
Analysts expect the market’s price range per barrel to remain at $ 40-45, uncertainty over the return of US supply and fuel demand, as new lockdowns may be needed to avoid the re-emergence of COVID-19 cases.