Oil slips below $45/bbl on demand concerns but posts weekly rise

Daniel Fowler
August 9, 2020

The resurgence of coronavirus infections remains the main uncertainty in the oil market, as that will determine how fast fuel demand rebounds.

According to reports, there are signs of a second wave of coronavirus infections emerging in Europe after data showed an uptick in cases in some countries, including Spain, Belgium and Luxembourg.

Brent crude was trading 0.09 per cent lower at United States dollars 45.05 per barrel in NY.

U.S. West Texas Intermediate (WTI) crude () futures eased 3 cents, or 0.1%, to $42.16 a barrel by 0436 GMT, while Brent crude () futures rose 9 cents or almost 0.2% to $45.25. "Thus we are seeing both Brent and WTI flip-flopping each side of unchanged, trading exclusively on intra-day short-term flows, with no overriding theme", said Jeff Halley, senior market analyst at OANDA. Else he will be pulling out of discussion and issuing necessary executive orders to help economic growth instead.

"The US Congress can't seem to come up with a plan for the next round of stimulus and it's creating doubt for US economic recovery", said Gary Cunningham, director of market research at Tradition Energy.

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While OPEC+ eased production cuts this month, Iraq promised to step up its commitments having failed to deliver on previous cuts, removing just 11,000 barrels a day last month according to Bloomberg. The nation has been a laggard in fully meeting its pledge as part of an April deal to reduce supply.

Oil headed for its best week since early July, despite stumbling ahead of U.S.jobs numbers that are expected to paint a gloomy picture of the labor market in the world's biggest economy.

"In the medium term, the weak demand is likely to weigh more heavily than the positive sentiment, which is why we expect prices to correct in the near future", he said, adding that major oil producers' decision to roll back the production cuts "was premature".

US Energy companies have reduced the number of active oil and natural gas rigs to a record low since July 2005 this week.

Money managers raised their net long US crude futures and options positions in the week to Aug 4 by 8,096 contracts to 368,643, the US Commodity Futures Trading Commission (CFTC) said.

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