Oil prices inch up as demand upswing counters virus concerns

LONDON: Oil prices inched up on Friday as the bullish impetus from signs of fuel demand recovery was kept in check by a rising number of new coronavirus cases in the United States and China and tentative expecations of US output ticking up.

Brent crude futures were 40 cents higher at $41.45 at 1127 GMT. US West Texas Intermediate (WTI) crude futures were up 21 cents at $38.93.

The contracts are on track for weekly falls of around 1.8% and 2.2%, respectively, after record US crude inventory data dragged prices down on Wednesday.

Congestion in Shanghai in the past few weeks was higher than in the same period last year, while in Moscow traffic was back to last year's levels, data provided to Reuters by location technology company TomTom showed.

"Road traffic levels in a number of the world's major cities reached the previous year's level in June, which indicates that demand for fuel is normalising," Commerzbank said in a note.

However, there are fears a spike in COVID-19 infections in southern US states could stall the demand recovery, especially as some of those states, such as Florida and Texas, are among the biggest gasoline consumers.

The global economic outlook has also worsened or at best stayed about the same in the past month, a majority of economists polled by Reuters said, and the recession underway is expected to be deeper than earlier predicted.

"It does appear the market is ignoring supply and demand fundamentals and moving on sentiment," said Michael McCarthy, chief market strategist at CMC Markets.

The prospect of increased US crude production also kept a lid on gains on Friday.

A survey of executives in the top US oil and gas producing region by the Dallas Federal Reserve Bank found more than half of executives who cut production expect to resume some output by the end of July.