LONDON — Oil dipped below $45 a barrel on Friday on worries that a demand recovery would slow due to a resurgence of coronavirus cases, although a pledge from OPEC member Iraq to cut output further in August gave some support.
The resurgence of infections remains a key issue for the market and demand outlook. Tallies show cases in the United States are rising in a number of states.
Meanwhile, India reported a record daily jump in infections.
Brent crude LCOc1 fell 56 cents, or 1.2%, to $44.53 by 1345 GMT. U.S. West Texas Intermediate (WTI) crude CLc1 slipped 44 cents, or 1.1%, to $41.51.
Both benchmarks are set for weekly gains of more than 2%.
“Keeping the price levels would be unrealistic,” Bjornar Tonhaugen of Rystad Energy said of this week’s rise. “Traders rushed to the task today to correct the gains, remembering the invisible enemy, COVID-19.”
Traders were also watching talks in the United States over the next coronavirus stimulus package. Democratic leaders in the U.S. Congress and top aides to President Donald Trump failed to make substantial progress on Thursday.
“Failure to extend aid would deal a massive blow to the recovering U.S. economy and the fragile oil demand outlook,” said Stephen Brennock of oil broker PVM.
U.S. non-farm payrolls for July came in slightly better than expected, but still showed employment growth slowed considerably.
Over the week, a weaker U.S. dollar helped to support oil prices by making the commodity more attractive to buyers holding other currencies. The dollar index was up on Friday.
Oil has recovered from lows reached in April, when Brent slipped below $16, a 21-year low, thanks in part to a record deal on supply cuts by OPEC and its allies.
Saudi Arabia’s energy minister and his Iraqi counterpart this week stressed their commitment to the deal. Iraq has been a laggard in fully meeting its pledge.
*Alex Lawler; Sonali Paul & Shu Zhang; Editing: Jane Merriman, Jason Neely & Alexander Smith – Reuters