Oil gains but heading for weekly fall over coronavirus demand concerns

TOKYO: Oil prices rose on Friday but are on track for a weekly fall because of rising concerns about the global resurgence of coronavirus infections and its effects on fuel demand, while the likely return of exports from Libya will add to supply.

Brent crude was up 17 cents at $42.11 a barrel by 0346 GMT, while U.S. West Texas Intermediate (WTI) crude CLc1 gained 16 cents to $40.47.

Brent is heading for a drop of around 2.5% this week with U.S. crude on track for a decline of about 1.5%. Both benchmarks are also heading for a monthly decline, which would be the first for Brent in six months.

“Fundamentally, nothing has changed to the supply side of the equation that is weighing on oil prices in the bigger picture,” said Jeffrey Halley, senior market analyst at OANDA.

An oil tanker was loading a cargo on Thursday from one of three Libyan terminals that were reopened in recent days and more cargoes are expected to be lifted in the coming days.

In the United States, which has the highest death toll from the coronavirus pandemic and is the world’s biggest oil consumer, unemployment claims unexpectedly rose last week suggesting an economic recovery is flailing and pushing down fuel demand.

U.S. fuel demand remains in the doldrums as the pandemic constrains travel. The four-week average of gasoline demand last week was 9% below a year earlier, government data showed on Wednesday.

In other parts of the world, daily increases of coronavirus infections are hitting records and new restrictions are being put in place that will likely limit travel and fuel demand.

In India, throughput by crude oil refiners in August fell 26.4% from a year ago, the most in four months, as fuel demand ebbed because surging coronavirus cases hindered industrial and transport activity.

“Crude prices will have difficulty rallying, on a structural basis, unless refining margins lead the path higher,” RBC Capital Markets said in a note.

The profit from producing fuels from benchmark Dubai crude at a refinery in Singapore was 26 cents a barrel on Thursday, down from $8.03 a year earlier.