NEW YORK (Reuters) - Oil prices settled lower on Friday as new coronavirus cases spiked in the United States and China, and on growing concerns about rising U.S. output ticking up while crude stockpiles sat at record highs.
Brent crude LCOc1 futures settled down 3 cents at $40.91, falling 1% on the week. U.S. West Texas Intermediate (WTI) crude CLc1 futures fell 23 cents to $38.49, down 1.6% on the week.
Earlier gains, supported by optimism over rising road traffic boosting fuel demand, were erased in U.S. trading on fears that spiking COVID-19 infections in large gasoline-consuming U.S. states could stall the demand recovery. Cases have risen sharply in California, Texas and Florida, the three most populous U.S. states.
Friday morning, Texas Governor Greg Abbott reversed the state’s reopening plan, ordering most bars to close due to the surge in cases.
That could undermine the steady increase in refining output, with U.S. refiners now operating at nearly 75% of their capacity, according to government data.
“Employers are delaying the return of their employees back to the office and that will impact the return of gasoline demand,” said Andrew Lipow, president of Lipow Oil Associates.
(GRAPHIC: April gasoline demand - here)
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 under way is expected to be deeper than earlier predicted.
A Dallas Federal Reserve Bank survey of executives in the top U.S. oil and gas producing region found more than half of executives who cut production expect to resume some output by the end of July.
U.S. and Canadian energy firms cut the number of oil and natural gas rigs operating to a record low again this week, according to data from Baker Hughes.
Reporting by Laura Sanicola in New York; Additional reporting by Shadia Nasralla in London, Aaron Sheldrick in Tokyo and Sonali Paul in Melbourne; Editing by Kirsten Donovan, Matthew Lewis and David Gregorio