Oil prices were little changed on Friday but on track for a weekly fall on concerns that a global resurgence of COVID-19 infections will constrain fuel demand, while the likely return of exports from Libya will add to supply.
U.S. West Texas Intermediate (WTI) crude was 14 cents weaker at $40.00.
Brent crude was down 2 cents at $41.70 a barrel.
Brent is heading for a drop of nearly 3% this week, while U.S. crude is on track for a decline of almost 2%. Both benchmarks are also on track for a monthly decline, which would be the first for Brent in six months.
“The prospect of the return of Libyan barrels to the market is adding to the bearish sentiment,” RBC Capital Markets said in a note. “However, we think the return of the barrels will be slow and subject to reversal based on the volatile security and political picture.”
An oil tanker was loading a cargo on Thursday from one of three Libyan terminals that were reopened in recent days and more cargoes are expected to be lifted in the coming days.
Beyond that “crude prices will have difficulty rallying, on a structural basis, unless refining margins lead the path higher,” RBC said.
In the United States, which has the highest death toll from the COVID-19 crisis and is the world’s biggest oil consumer, unemployment claims unexpectedly rose last week suggesting an economic recovery is flailing and pushing down fuel demand.
U.S. crude, gasoline and distillate inventories all fell last week, according to government data on Wednesday.
Still, U.S. fuel demand remains in the doldrums as the pandemic constrains travel. The four-week average gasoline demand last week was 9% below a year earlier, government data showed earlier in the week.
In other parts of the world, daily increases of coronavirus infections are hitting records and new restrictions are being put in place that will likely limit demand for travel and fuel.
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