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Oil Holds Near $42 With Pandemic Worries Capping Price Gains

By Elizabeth Low and Alex Longley

(Bloomberg) Oil held near $42 a barrel in New York as the demand impact of the coronavirus pandemic continues to cap price gains.The growing signs of a resurgence of the disease is highlighting the patchy recovery in oil consumption. The International Energy Agency this week downgraded a majority of its demand forecasts for the next 18 months. The U.K. placed new rules on arrivals from some countries as virus cases rise in Europe, sending equities in the region lower.Still, crude is set to eke out a small weekly gain following a decline in U.S. crude stockpiles, a rise in gasoline consumption and higher refinery activity. Gasoline production in Europe, though, is currently unprofitable.

U.S. crude futures on track for second weekly gain

At the same time, OPEC+ is slowly adding some supply back to the market and will hold a committee meeting next week to discuss its impact.

“The uncertainty over future demand, coupled with rising production, will make it challenging to restore the balance on the oil market,” said Eugen Weinberg, head of commodities research at Commerzbank AG.

  • West Texas Intermediate for September delivery was 0.3% lower at $42.12 a barrel as of 8:53 a.m. in New York
  • Brent for October settlement lost 14 cents to $44.82

China’s economic recovery continued in July, with industrial output growing at the same pace as June due to overseas demand, according to data released Friday. Consultants are expecting the world’s biggest oil importer to boost its purchases for later in the year, potentially adding support to crude.

Other oil-market news
  • Brent is on track to rise to $60 in the first half of next year, and the forward curve is likely to flip into backwardation, if OPEC+ adheres to output cuts and the pandemic eases, Bank of America said in a report.
  • Lim Oon Kuin, founder of fabled oil trading company Hin Leong (Pte) Ltd., was charged in court on Friday with abetment of forgery for the purpose of cheating, according to a chargesheet seen by Bloomberg.
  • OPEC+ has delayed its Joint Ministerial Monitoring Committee by a day to Aug. 19 due to Russian Energy Minister Alexander Novak’s schedule, according to delegates.

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