Oil prices were steady on Friday, as uncertainty over global recovery in fuel demand grows as new COVID-19 cases surge in several countries.
For instance, while Brent Crude futures were steady at $43.37 a barrel, U.S. West Texas Intermediate (WTI) crude futures rose one cent to $40.76 a barrel on Friday morning.
Both were still on track to end the week up slightly.
On Thursday, while Nigeria reported 595 new COVID-19 cases, the U.S. reported at least 77,300 new infections, highest number since the beginning of the pandemic.
Spain and Australia reported their steepest daily jumps in more than two months, cases continued to soar in India and Brazil stepped up lockdown measures.
The two benchmark contracts fell one per cent on Thursday after the Organisation of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+, agreed to trim record supply cuts of 9.7 million barrels per day (bpd) imposed earlier this year by some two million bpd from August.
But actual output additions will be closer to 1.1 million bpd, as countries like Iraq – which overproduced compared with their commitments to cut supply in May through July – agreed to bigger reductions in August and September.
Vivek Dhar, commodities analyst at Commonwealth Bank of Australia, said the market took some heart with the agreement for some to compensate for previous non-compliance with commitments at a time when there is uncertainty over demand growth.
“They’re taking those precautions.That gives the market confidence that OPEC+ is looking quite closely at those conditions to make sure they don’t push the market in the wrong direction,’’ he said.
Analysts expect the market to remain in the $40-45 a barrel range, with the looming return of some U.S. supply and uncertainty over fuel demand as new lockdowns may be needed to curb the resurgence of COVID-19 cases.
“The problem with the market right now is prices have got to a level where we’re concerned U.S. supply is going to come back,’’ Dhar added.