Oil prices moved lower on Friday, with trademarked by increasing uncertainty about the global recovery in fuel demand as new cases of COVID-19 surged in several countries coupled with major producers preparing to ease production restrictions.
Brent crude (LCOc1) futures fell 11 cents, or 0.3%, to $ 43.26 a barrel and West Texas Intermediate (CLTI) crude oil fell 4 cents, or 0.1% to $ 40.71.
At least 75,000 increases in COVID-19 cases were reported by the United States on Thursday. Spain and Australia reported their sharpest daily jumps in more than two months, cases continued to soar in India and Brazil increasing the likelihood of a lockdown.
The surge in coronavirus infections is slowing the recovery of fuel use after a reduction in locking in the United States and other countries, raising fears it may take years before consumption recovers from the effects of a pandemic.
Two oil contracts fell 1% on Thursday after the Organization of the Petroleum Exporting Countries (OPEC) and its allies, jointly known as OPEC +, agreed to cut supplies by 2 million barrels per day (BPD) which took effect in August.
Analysts' Forecast on Oil Prices
But the actual increase will be even greater because countries such as Iraq - which are overproductive compared to their commitments to cut supplies from May to July - agree to greater reductions in August and September, said Vivek Dhar, commodity analyst at the Commonwealth Bank of Australia.
"They are taking precautionary measures. That gives market confidence that OPEC + is looking closely enough at these conditions to ensure they do not push the market in the wrong direction," he said.
Analysts expect the market to remain in the range of $ 40 - $ 45 per barrel, with the return of some US supplies and uncertainty over fuel demand because new locking may be needed to curb the revival of the COVID-19 case.
Oil prices appeared to weaken on Thursday after OPEC and its allies such as Russia agreed to reduce the number of supplies from August, although the decline was supported by hopes for a rapid increase in US demand.
Brent crude fell 33 cents, or 0.8%, to $ 43.46 per barrel, and West Texas Intermediate (WTI) crude fell 42 cents or 1.0% to $ 40.78 per barrel. Prices rose 2% the previous day, helped by a decline in US crude oil inventories.
Cutting Oil Production Performed By OPEC+
OPEC + has cut production since May by 9.7 million barrels per day, or 10% of global supply, but starting in August, the official reduction will be reduced to 7.7 million barrels per day until December.
Kazuhiko Saito, chief analyst at Fujitomi Co. said, "after the decision of OPEC +, some investors are trying to take advantage of that decision." US crude fell by 7.5 barrels last week, shrinking more than analysts had predicted, according to data from the Energy Information Administration.
Although there has been an official OPEC + agreement, Prince Abdulaziz bin Salman of the Saudi Arabian Energy Minister said that in August and September production will be reduced by around 8.1 million-8.3 million per day, this number is greater than the main amount.
That's because countries in the overproduction group earlier this year will compensate by making additional cuts in August-September, the minister said.
"I expect Brent will hold a tight range of $ 40.50 - $ 46.50 for the next month or so," said Tsutomu Kosuge, president of the market research company Marketedge Co. He also added that rising tensions between China and the United States could weigh on market sentiment. U.S. Secretary of State.
On Wednesday Mike Pompeo took aim at China, saying that the United States would impose visa restrictions on Chinese companies such as Huawei Technologies due to accusations of facilitating human rights violations.
