Oil heads for 3pc weekly drop as coronavirus demand concerns mount

NEW YORK: Oil slipped on Friday and was on track for a 3% weekly decline due to mounting worries about resurgent coronavirus infections crushing fuel demand and as Libyan crude exports resume.

Brent crude was down 7 cents at $41.87 a barrel by 1:49 p.m. EDT (1748 GMT), while US West Texas Intermediate (WTI) crude lost 11 cents to $40.20.

Both benchmarks were on track for a fall of more than 3% this week.

"There's a lid on this market to the extent that COVID-19 keeps rearing its ugly head in different spots," said John Kilduff, Partner at Again Capital in New York. "We just can't get this demand perked back up."

In the world's top oil consumer the United States, infections were rising in the Midwest, while New York City, which was hit hardest in the spring, is considering renewed shutdown mandates. More than 200,000 people have died of the virus in the nation.

US fuel consumption remains sluggish as the pandemic constrains travel and hampers economic recovery.. The four-week average of gasoline demand last week was 9% below a year earlier.

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

In India, throughput by crude oil refiners in August fell 26% from a year ago, most in four months, as demand ebbed because the pandemic is hindering industrial and transport activity.

At the same time, more crude oil entering the global market threatens to beef up supply and push prices lower.

The US oil and gas rig count, an early indicator of future output, rose six to 261 in the week to Sept. 25, energy services firm Baker Hughes Co said.

Libya has recently boosted production and Shell has provisionally booked the first crude tanker to load at Libya's Zueitina terminal since January.

Iranian oil exports, meanwhile, have risen sharply in September in defiance of US sanctions, three assessments based on tanker tracking showed.

A stronger dollar, which tends to move inversely with crude prices, in recent days also pressured oil prices.

"The stronger the dollar, the less dollars it takes to buy a barrel of crude oil," said Bob Yawger, director of energy futures at Mizuho.