Oil prices broadly stable as stimulus hopes balance virus fears

NEW YORK: Oil prices were broadly stable on Friday in early US trading, as expectations of more economic stimulus programmes balanced concerns about the recovery in fuel demand as coronavirus cases surge and major crude-producing nations ready increases in output.

Brent crude futures fell 15 cents to $43.22 a barrel by 12:10 EDT (1610 GMT). US West Texas Intermediate (WTI) crude dropped 6 cents to $40.69. Both contracts were on track to remain broadly flat over the week.

The United States reported at least 75,000 new COVID-19 cases on Thursday, a daily record. Spain and Australia reported their steepest daily jumps in more than two months, while cases continued to soar in India and Brazil.

Lawmakers in the United States and the European Union are set to debate the next tranches of stimulus programmes over the coming days.

"While virus cases remain on the rise in providing an upside price limiter, expectations for some additional Congressionally driven stimulus appear to be offering support to equities that is spilling into the oil space," said Jim Ritterbusch of US-based energy consultants Ritterbusch and Associates.

Benchmark crudes fell 1% on Thursday after the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, agreed to trim record supply cuts of 9.7 million barrels per day (bpd) by 2 million bpd, starting in August.

"With more production coming online from August, a dip in demand can really play a pivotal role in pushing recovering prices back to lower levels," said Rystad oil markets analyst Louise Dickson.

The actual production increase will be closer to 1 million bpd because Iraq and other countries, which produced more than their quota from May to July, are expected to make extra cuts in August and September, said Vivek Dhar, commodities analyst at Commonwealth Bank of Australia.