Oil also lost ground on Friday as analysts downgraded their demand forecasts for this year because of the continuing impact of the COVID-19 pandemic on major economies.
Future demand forecasts for oil and oil products were cutback last week by the US Energy Information Administration (EIA), OPEC and the International Energy Agency (IEA).
In its latest monthly report Thursday, the IEA said it now expects global oil demand in 2020 to fall by 8.1 million barrels a day to 91.9 million barrels a day from 2019.
OPEC’s monthly report on Wednesday forecast a larger fall of 9.1 million barrels a day in 2020 demand growth for global petroleum and liquid fuels to 90.6 million barrels a day, while the monthly short-term outlook from the EIA on Tuesday forecast 2020 demand at 93.1 million barrels a day, down 8.1 million from 2019.
Those forecasts are little changed from forecasts several months ago and are well above the 7.7 million barrels a day production cap from OPEC, Russia, and their allies.
That suggests there’s going to have to be more cuts from producer countries.
Those forecasts weighed on the minds of traders and eventually, oil fell Friday.
West Texas Intermediate crude for September delivery in New York fell 23 cents, or 0.5%, to settle at $US42.01 a barrel, while, October Brent crude lost 16 cents, or 0.4%, at $44.80 a barrel on ICE Futures Europe.
For the week, WTI rose1.9% higher, while Brent gained 0.9% because of big gains earlier in the week.
In its weekly report on Wednesday, the EIA reported US production fell 300,000 barrels a day to 10.7 million barrels a day along with a drop of 4.5 million barrels in crude inventories—the third weekly drop in a row.
In a sign of continuing weakness, Baker Hughes on Friday reported that the number of active rigs operating in the US fell for yet another week, by 4 to 172 last week.
