Oil falls 3%, posts weekly drop on demand concerns
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[September 05, 2020] By
Stephanie Kelly
NEW YORK (Reuters) - Oil prices fell more
than 3% on Friday and posted their biggest weekly decline since June as
fears of a slow economic recovery from the COVID-19 pandemic compounded
worries about weak oil demand.
Brent crude <LCOc1>, the international benchmark, fell $1.41, or 3.2%,
to settle at $42.66 a barrel. U.S. West Texas Intermediate (WTI) <CLc1>
fell $1.6, or 3.9%, to settle at $39.77 a barrel.
Brent fell 5.3% from last week, while WTI lost 7.4%.
Prices were pressured by extended declines in the U.S. equities market
and by a report showing U.S. job growth slowed further in August as
financial assistance from the government ran out.
Nonfarm payrolls increased by 1.37 million jobs last month, though
employment remained 11.5 million below its pre-pandemic level and the
jobless rate was 4.9 percentage points higher than in February.
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The unemployment rate fell to 8.4% last month, compared with a forecast
9.8%, which some market analysts said would lessen urgency in
Washington, D.C. to pass additional economic stimulus legislation.
"The hopes for more stimulus are going out the window," said John
Kilduff, partner at Again Capital in New York. "We need to see economic
activity back up to get demand flowing."
A U.S. government report this week showed domestic gasoline demand has
fallen again, while middle distillate inventories at Asia's Singapore
oil hub have surpassed a nine-year high, official data showed.[EIA/S].
"The bigger market picture is overall bearish sentiment that kicked off
with lower gasoline demand reports on Wednesday," said Paola Rodriguez-Masiu,
analyst at Rystad Energy.
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The sun sets behind a crude oil pump
jack on a drill pad in the Permian Basin in Loving County, Texas,
U.S. November 24, 2019. REUTERS/Angus Mordant
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Global oil demand could fall by 9-10 million barrels per day (bpd) this year due
to the pandemic, Russian Energy Minister Alexander Novak said.
A record supply cut since May by the Organization of the Petroleum Exporting
Countries (OPEC) and its allies, a group known as OPEC+, has supported prices.
OPEC began in August to ease the scale of the cuts, raising output by almost 1
million bpd, according to a Reuters survey. [OPEC/O]
In the United States, the oil and gas rig count, an early indicator of future
production, rose two to 256 in the week to Sept. 4, energy services firm Baker
Hughes Co <BKR.N> said on Friday. It was the second time in the past three weeks
that energy firms added rigs. <RIG-USA-BHI>, <RIG-OL-USA-BHI>, <RIG-GS-USA-BHI>
Money managers raised their net long U.S. crude futures and options positions by
541 contracts to 334,983 during the period in the week to Sept. 1, the U.S.
Commodity Futures Trading Commission (CFTC) said on Friday.
(Reporting by Stephanie Kelly; additional reporting by Alex Lawler, Florence Tan
and Koustav Samanta; Editing by Marguerita Choy, David Gregorio and Andrea
Ricci)
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