Oil prices dip on sluggish coronavirus recovery

Oil prices edged lower on Friday but held near a five-month high as an easing of coronavirus lockdowns aids a slow recovery in fuel demand while major crude producers seek to limit supply.

Brent crude LCOc1 futures were down $0.52, or 1.1%, at $44.38 a barrel by 0850 GMT, heading for a 0.9% weekly decline.

US West Texas Intermediate (WTI) crude CLc1 futures were down $0.48, or 1.1%, at $42.34 but on track for a weekly gain of about 0.9%.

The euro zone’s economic recovery from its deepest downturn on record has stuttered this month as the pent-up demand unleashed by the easing of lockdowns in July has dwindled, a survey showed on Friday.

In another sign of sluggish recovery, India’s crude oil imports fell in July to their lowest since March 2010 amid renewed coronavirus lockdowns and refinery maintenance.

“Demand, in our view, is only likely to near pre-pandemic levels in 2021 and the rest of 2020 will be a muted struggle while facing the effects of the second wave,” consultancy Rystad Energy said in a note.

At the same time, the Organisation of the Petroleum Exporting Countries (OPEC) and allies including Russia were focused on ensuring that members who had overproduced against their commitments would reduce their output.

Reuters on Thursday reported that an OPEC+ internal report showed the group wanted oversupply between May and July compensated for with cuts this month and next.

It also showed OPEC+ expects oil demand in 2020 to fall by 9.1 million bpd and by as much as 11.2 million bpd if there is a prolonged resurgence of coronavirus infections in the second half of the year.