Oil prices dipped on Friday, adding to losses from the previous session, on worries that fuel demand recovery will slow amid a resurgence of coronavirus cases and as talks have stalled in the United States on a new stimulus deal.
U.S. West Texas Intermediate (WTI) crude futures slipped 17 cents, or 0.41%, to $41.78 a barrel by 0651 GMT, while Brent crude fell 17 cents, or 0.38%, to $44.92. Both contracts had traded higher earlier in the day.
However, the two contracts are set for weekly gains of around 4%, the most for the two benchmarks since the week ending on July 3.
The resurgence of coronavirus infections remains the key issue for the oil markets, as that will determine how fast fuel demand rebounds, analysts said. Tallies show infections in the United States are rising in a number of states, including Colorado, Ohio and Virginia.
The weakness in physical crude and sluggish refinery margins across most regions also weighed on prices.
“It really comes down to the demand situation,” said AxiCorp market strategist Stephen Innes.
“We’re caught in limbo trying to collect our thoughts on how the (coronavirus) curve is going to work. Is the flattening in the U.S. going to outweigh flare-ups globally?” he said.
Analysts were also watching the lack of progress in the talks between the White House and Democrats over the next coronavirus stimulus package, with Democrats saying President Donald Trump may have to issue executive orders if he does not want to negotiate further.
“The virus relief package remains the last hope to boost (fuel) demand, with the U.S. driving season coming to an end soon,” ANZ Research said in a note.
Over the week, a weaker U.S. dollar helped support oil prices by making the dollar-denominated commodity more attractive to crude buyers holding other currencies.
The dollar index, which measures the greenback against six major currencies, dropped to its lowest since May 2018 on Thursday.
While the index is up slightly today, the dollar is expected to weaken ahead of U.S. non-farm payrolls data that are widely expected to show jobs creation slowed in July from the previous month amid a surge in COVID-19 infections.
Source: Reuters (Reporting by Sonali Paul; Addintional reporting by Shu Zhang; Editing by Christian Schmollinger and Tom Hogue)