Oil posted just its second weekly decline since late April as a surge in COVID-19 cases in the US clouded the demand outlook, but the pessimism was tempered by signs that Russia is determined to curb output.
Futures in New York rose toward US$39 a barrel on Friday, but were still down 3.4 percent for the week.
Texas — the center of the US oil industry — halted its reopening as infections jumped and Houston’s intensive care wards reached capacity.
Russian exports of the flagship Urals grade from its three main western ports is to plunge by 40 percent next month, according to loading plans seen by Bloomberg.
The steep reductions underscore Moscow and the OPEC+ alliance’s commitment to eliminate the oil glut that was built up earlier in year.
While crude has rebounded rapidly from its plunge below zero in April, the gains have slowed this month.
Infections continue to surge in many parts of the world, demand still has a long way to get back to pre-virus levels and many refiners are struggling with low margins. There is also a risk that US shale producers start bringing back output.
“The market’s concerned about the rising COVID-19 cases in the US and what that would mean for the recovery in demand,” said Daniel Hynes, senior commodity strategist at Australia & New Zealand Banking Group Ltd. “You are going to be see a very headline-driven market, but within a fairly tight range considering the rally we have seen over the past couple of months.”
West Texas Intermediate for August delivery rose about 0.5 percent to US$38.49 a barrel on the New York Mercantile Exchange, down 3.4 percent for the week.
The US benchmark crude is up about 10 percent so far this month following an 88 percent surge last month.
Brent for August delivery on Friday advanced about 0.6 percent to US$41.31 on the ICE Futures Europe exchange and was down 2.7 percent for the week.
The global benchmark crude’s prompt timespread was US$0.02 in contango — where later-dated contracts are more expensive than near-dated ones — narrowing from US$0.22 in contango on Wednesday. The move suggests that concerns over excess supply are easing.
In the US, the surge in virus cases is coming in some of the most important places for oil demand.
Nine of the top 20 gasoline-consuming states are showing an upward trend in infections, Standard Chartered PLC said in a note.
Urals exports from Primorsk and Ust-Luga in the Baltic Sea and Novorossiysk in the Black Sea is to fall to about 785,000 barrels a day next month, the loading plans show.
Russia began shipping from Ust-Luga only in 2012 and flows from the three ports have never been lower on a combined basis since then.
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