Oil futures traded on a mixed note Friday with U.S. prices giving up early gains to move lower, on pace to suffer their first weekly loss in seven weeks on worries about oversupply and a resurgence of coronavirus cases in the U.S.
Oil is likely to “remain vulnerable and exposed to downside shocks thanks to coronavirus-related concerns,” said Lukman Otunuga, senior research analyst at FXTM.
“The possibility of renewed lockdowns and delayed global economic recovery is bad news for oil, which remains one of the biggest causalities of the coronavirus menace,” he told MarketWatch.
Although OPEC+ agreed to extend production cuts by another month, in the grand scheme of things this may offer little support to oil which is in “a losing battle with COVID-19 and world growth fears,” he said.
West Texas Intermediate crude for July delivery CL.1, -1.15% CLN20, -1.15%, the U.S. benchmark, fell 43 cents, or 1.2%, at $35.91 a barrel on the New York Mercantile Exchange. The contract tumbled 8.2% on Thursday to mark the sharpest one-day fall since April 27 and the lowest settlement since June 1, according to Dow Jones Market Data.
Global benchmark Brent oil for August delivery BRNQ20, -0.10%, however, picked up 6 cents, or 0.2%, at $38.61 a barrel on ICE Futures Europe, following a 7.6% plunge Thursday, its steepest such slide since April 21, that also took it to its lowest level since June 1.
For the week, WTI is poised for a weekly slide of 9%, while Brent was looking at a decline of 8.7%.
That would represent the first weekly loss since the week ended April 24, according to FactSet data.
Concerns over further weakness in the global economy has raised expectations for weaker energy demand, pressuring prices for oil.
The International Monetary Fund’s Gita Gopinath said that the global economy is recovering more slowly than expected and faces “significant scarring,” Bloomberg News reported.
Worries of a resurgence of the pandemic has added to recent concerns about the ability of the Organization of the Petroleum Exporting Countries and its allies, in a group known as OPEC+, to curtail global production by 9.7 million barrels a day through July.
Despite the worries, analysts at Barclays remain bullish on the outlook for the oil market, even if they expect the pace of recovery from the depths of oil’s rout in April to slow.
“As we mark to market our [second quarter] estimates and account for a potentially larger [second half] deficit, we raise our 2020 oil price forecasts by $4 [a barrel] but remain cautious with respect to the curve over the near term,” wrote Amarpreet Singh, vice president of oil strategy at Barclays, in a late Thursday research note, referring to Brent oil.
On Nymex, July gasoline RBN20, -1.02% was down 0.7% at $1.1115 a gallon, headed for a weekly loss of more than 8%, while July heating oil HON20, +1.01% added 1% to $1.0991 a gallon, trading over 4% lower for the week.
July natural gas NGN20, -1.98% shed 1.9% to $1.779 per million British thermal units, with prices looking at a loss of nearly 0.2% for the week.
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