Global oil prices fall as growing coronavirus cases stoke fuel demand worries

Oil prices eased on Friday, reversing earlier gains, as the resurgence of the coronavirus globally and in the United States, the world's largest oil consumer, stoked worries that a fuel demand recovery could stall. Brent crude futures were down 29 cents, or 0.7 per cent, at $42.85 a barrel as of 0339 GMT, and US West Texas Intermediate (WTI) crude futures fell 31 cents, or 0.8 per cent, to $40.34 a barrel.

Both benchmarks rose more than 2 on Thursday, buoyed by stronger-than-expected U.S. jobs data and a fall in US crude inventories. For the week, Brent is up 4.4 per cent and WTI is up 4.8 per cent. Increases in the daily cases of the coronavirus, however, globally and in the United States pressured prices. New US COVID-19 cases rose by more than 50,000 on Thursday, setting a record for a third consecutive day, according to a Reuters tally.

"Crude oil prices are notoriously fickle when it comes to oscillations in global sentiment," said Dimitri Zabelin, analyst at DailyFX. Should the number of coronavirus cases continue to grow and increase the need to take stronger measures to stem the spread of the virus, the weakened growth implications of such policies could weigh on crude oil prices, Zabelin said.

"The market has become increasingly confident that easing restrictions on travel and business would boost demand for crude oil, but the pandemic's progress threatens to derail this recovery," ANZ Research said in a note. Gasoline demand will be closely watched as the United States heads into its July 4 holiday weekend when many Americans are expected to hit the road.

"The recovery in gasoline demand will plateau until the US economy improves," ANZ Research added. US gasoline stocks rose by 1.2 million barrels in the week to June 26, according to data from the Energy Information Administration released on Wednesday.

Also read: Goldman Sachs sees oil demand recovering to pre-COVID levels by 2022