TOKYO – Oil prices rose on Friday, after touching three-week lows in the previous session, responding to a record decline in U.S. growth as the coronavirus ravaged the world’s biggest economy and oil consumer.
Brent crude was up by 41 cents, or 1%, at $43.35 a barrel by 0702 GMT. On Thursday, Brent closed down 1.9% after touching its lowest level since July 10.
U.S. crude gained 43 cents, or 1.1%, to $40.35 after dropping 3.3% the previous session, also off lows not seen since July 10.
Brent is on track for a fourth month of gains, while U.S. crude is heading for a third, as both rise from depths hit in April when much of the world was in lockdown.
A resurgence and spread of infections around the world, however, underscore the sustained threat to oil demand.
“The equilibrium price may be lower,” said Michael McCarthy, chief strategist at CMC Markets. “Now that we have dealt with the issues around the OPEC+ grouping, we know what’s happening there, the key issue for oil markets is demand destruction.”
OPEC+, a grouping of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, plans to increase production from Saturday, adding about 1.5 million barrels per day to global supply.
Globally, the economic outlook has dimmed again, with increasing coronavirus infections raising the risk of renewed lockdowns and threatening any rebound, according to Reuters polls of over 500 economists.
That was underlined by news on Thursday news that U.S. gross domestic product collapsed at a 32.9% annualised rate, the deepest decline in output since records began in 1947.
In Germany, there was also a record decline in output, with Europe’s largest economy contracting by 10.1% quarter on quarter from April to June.
Japan’s oil imports fell by more than 30% in June to around 1.9 million bpd, while product sales were down 10%, industry ministry data showed on Friday.