Oil slides on virus fears, but Brent crude heads for weekly gain

Seoul/London — Oil fell below $43 a barrel on Friday as a resurgence of coronavirus cases raised concern that fuel demand growth could stall, though crude was still headed for a weekly gain on lower supply and wider signs of economic recovery.

The US reported more than 55,000 new coronavirus cases on Thursday, a new daily global record for the pandemic. The rise in cases suggested US jobs growth, which jumped in June, could suffer a setback.

Brent crude was down 52c, or 1.2%, at $42.62 a barrel at 8.05am GMT, and US West Texas Intermediate (WTI) crude fell 50c, or 1.2%, to $40.15.

“The fragile US economic rebound is at risk of being undone by the latest surge in new infections,” said Stephen Brennock of oil broker PVM.

Both benchmarks rose more than 2% on Thursday, buoyed by strong US June jobs figures and a drop in US crude inventories. Brent is still heading for a weekly gain of more than 5%.

Signs of economic recovery, and a drop in supply after a record supply cut by the Organization of the Petroleum Exporting Countries and allies, known as Opec+, have helped Brent more than double from a 21-year low below $16 reached in April.

Boosting recovery hopes, a private survey showed on Friday that China’s services sector expanded at the fastest pace in more than a decade in June.

Opec oil production fell to its lowest in decades in June and Russian production has dropped near its Opec+ target.

The bankruptcy filing of US shale pioneer Chesapeake Energy also supported prices by raising expectations production will decline, JBC Energy said in a report.

Petrol demand will be closely watched as the US heads into the July 4 holiday weekend. US petrol stocks rose by 1.2-million barrels last week.

Reuters