Oil fell as economic signals out of Europe and Asia flashed warning signs about the rebound in crude consumption.
Europe’s economy unexpectedly lost momentum this month, spurring concerns over oil demand.
The region is battling to control a new spike in virus cases while trying to avoid renewed lockdowns.
Overnight, a gauge of Japan’s service sector fell and continues to signal contraction.
Meanwhile, Libya’s National Oil Corp. said in a statement on Friday that it welcomed the country’s new cease-fire agreement and the company should be able to resume exports when all of its facilities are freed from military occupation, which would add more supply to the market.
“The PMIs looked like they were showing a deceleration in the economic activity for the euro zone,” said Andrew Lebow, senior partner at Commodity Research Group. “That’s going to be bearish,” for the oil market.
U.S. benchmark crude futures are on track for a weekly loss as a string of cautionary signals over the state of economic recovery worldwide weighs on the prospects for a demand pickup. Poland and Slovakia reported record daily cases, while in Asia, South Korea daily cases exceeded 300.
Oil has been buoyed in part due to shrinking U.S. stockpiles, Phil Flynn, senior market analyst at Price Futures Group, said in a note. “Yet the market has failed to break out and run because there are still concerns about Covid-19 and the possibility of a second wave.”
In Europe the ICE gasoil crack, a gauge for refining margins, is heading for the lowest close since June 4.
West Texas Intermediate for October fell $1.01 to $41.57 a barrel as of 11:16 a.m. in New York
Brent for the same month declined $1.20 to $43.70
Still, China demand for U.S. crude is providing a bright spot for prices, as American oil exports to China are set to reach a record next month in a sign that Beijing is stepping up purchases to meet its commitments under their trade deal. Adding support, the global oil market is currently undersupplied and looks positive over the next 12 months, UBS analyst Giovanni Staunovo said in a report.