Oil prices fall again due to fear of pandemic

SARAJEVO, (Patria) - Oil prices rose slightly on international markets on Friday, but are on track for their first weekly decline after six consecutive weeks of gains, due to fears for demand in case of a second wave of infections.

In the London market, the price of a barrel of crude oil increased by 20 cents or 0.52 percent compared to the previous market close, reaching USD 38.75. In trading the previous day, it fell by more than a dollar, reports Hrportfolio.

After falling more than five percent earlier on Friday, the price of a barrel of oil in the US market stabilized at USD 36.49, up 15 cents, or 0.41 percent, compared to the previous day's close, reports Montenegrin MINA.

Prices in both contracts closed down approximately eight percent on Thursday. Reference oil prices are thus on track for a weekly loss of more than eight percent, which is their first weekly drop after six weeks of growth.

The rise in oil prices was interrupted due to fears that the end of the coronavirus pandemic may not be in sight, given that approximately half of the states in the United States (US) are recording an increase in new cases of infection.

British bank Barclays raised its oil price forecast for this year by USD 4 per barrel on Friday, citing a slightly larger deficit in the second half of the year, but remains cautious due to the expected slow recovery in the near future.

"The intensity of the change in fundamentals will likely ease more significantly, as further improvement in demand will depend more on consumer behavior than on the easing of imposed movement restrictions," the British bank wrote in a note.

Producers from the US, as well as from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, the so-called OPEC+ group, are reducing supply, Reuters reminds.

OPEC+ reduced oil supplies by 9.7 million barrels per day, which is about a tenth of pre-pandemic demand, and last weekend agreed to extend that production cut.

Among important news for oil markets is the latest US government report on the increase in oil and gasoline inventories there last week. Crude oil inventories reached a record 538.1 million barrels, as cheap oil imported from Saudi Arabia arrived in the country.

Separately, OPEC reported that the price of a barrel of its reference basket of members was USD 36.55 on Thursday, meaning it fell slightly less than a dollar compared to the previous trading day.