By Adedapo Adesanya
Crude oil prices retreated at the end of the week on the back of more negative news from economic data worsened by the coronavirus pandemic.
on Friday, the Brent crude futures fell 70 cents or 1.56 per cent to trade at $44.20 per barrel, while the US West Texas Intermediate (WTI) crude futures dropped 48 cents or 1.12 per cent to $42.34 per barrel.
Eurozone purchasing managers index readings yesterday showed a slowdown in the region’s economic activity, while data out of Japan indicated a continued decline in activities.
The IHS Markit flash eurozone composite purchasing managers index slipped to a two-month low of 51.6 in August from 54.9 in July. The number, while pointing to improving conditions as it’s above 50, nonetheless, came in below economist expectations for a 55.3 reading.
Meanwhile, a renewed rise in COVID-19 cases in parts of Europe and elsewhere have underlined worries about the outlook for oil demand.
In the United States, the number of Americans who filed for unemployment benefit last week increased and topped one million after recording the lowest figure the previous week since the coronavirus pandemic began, according to the US Labor Department.
A total of 1,106,000, jobless claims were filed, representing a week-on-week increase of 135,000 and this was not supportive of the market.
In Asia, a cutback in refining activity in response to poor fuel demand is a troubling sign, analysts said.
Oil prices have collapsed as the coronavirus curtailed travel and economic activity. While some countries have resumed activities allowing demand to make recovery. However, the unfavourable outlook has kept a lid on prices and experts expect this to persist.
The problem of oversupply is also affecting the market. Reports noted that the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) offset could total 2.3 million barrels per day.
The group of OPEC+ producers that may need to compensate for past overproduction could cut by as much as 2.31 million barrels per day, according to calculations and if spread over more than one month, the figure would be smaller.
To further add to concerns over diminishing demand, US crude oil stocks fell less than market forecasts for the week ending August 14.
According to data released by the country’s Energy Information Administration (EIA), US commercial crude oil inventories fell by 1.6 million barrels to 512.5 million barrels for the week ending August 14, relative to the market expectation of a decrease of 2.7 million barrels.
