New York — Oil prices edged lower on Friday on worries that demand would recover more slowly than expected from COVID-19 pandemic lockdowns, while rising supply also overshadowed optimism over falling crude and fuel inventories.
This week, two prominent forecasters, the International Energy Agency and the Organization of the Petroleum Exporting Countries, trimmed their 2020 oil demand forecasts. OPEC and its allies are increasing output this month.
“The big-picture question is whether the spread of coronavirus is going to continue to impact on the return of gasoline and diesel demand,” said Andy Lipow of Lipow Oil Associates in Houston.
Brent crude fell 18 cents, or 0.4%, to $44.78 by 1:16 p.m. EDT (1714 GMT) but still heading for a rise of 0.9% this week. U.S. West Texas Intermediate CLc1 was down 23 cents, or 0.5%, at $42.01 and was on track for a weekly 2% rise.
Prices had been bolstered this week by U.S. government data showing crude oil, gasoline and distillate inventories falling last week as refiners ramped up production and demand for oil products rose.
“If that trend continues, it’s very supportive of prices and should drive prices higher,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.
The number of U.S. oil and gas rigs, an indicator of future supply, fell this week for a 15th straight week to record lows, according to energy services firm Baker Hughes.
“What’s holding us back on that sentiment is that the market is still afraid of what is going to happen next with the virus,” Flynn said.
Oil has recovered from lows touched in April, when WTI briefly turned negative. Still, a rise in the number of novel coronavirus infections has limited gains. India reported another record daily rise in cases on Thursday.
OPEC and allies including Russia, a group known as OPEC+, have cut output since May by around 10% of pre-pandemic global demand to support the market. The deal calls for an increase in output this month as demand recovers.
An OPEC+ panel meets on Wednesday to review the market.