Oil prices dip reversing earlier gains, headed for weekly falls

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Oil prices dipped on Friday, erasing earlier gains, as concerns about rising new coronavirus cases in the United States and China and expectations of US output ticking up while crude stockpiles linger at record highs.

Brent crude futures were 17 cents lower at $40.88 at 1233 GMT. US West Texas Intermediate (WTI) crude futures were 39 cents at $38.33, erasing previous gains.

The contracts are on track for weekly falls of around 3 percent and 3.5 percent, respectively, after record US crude inventory data dragged prices down on Wednesday.

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Earlier gains, supported by some optimism over rising road traffic boosting fuel demand, were erased in early US trading.

“Markets have got ahead of themselves and with the coronavirus pandemic still doing the rounds, there remains plenty of volatility on the horizon,” PVM analysts said.

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Fears linger that a spike in COVID-19 infections in southern US states could stall the demand recovery, especially as some of those states, such as Florida and Texas, are among the biggest gasoline consumers.

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The global economic outlook has also worsened or at best stayed about the same in the past month, a majority of economists polled by Reuters said, and the recession underway is expected to be deeper than earlier predicted.

The prospect of increased US crude production also kept a lid on gains on Friday.

A survey of executives in the top US oil and gas producing region by the Dallas Federal Reserve Bank found more than half of executives who cut production expect to resume some output by the end of July.

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