India markets open in 8 hours 16 minutes

Oil dips on rise in U.S. coronavirus cases, set for weekly fall

Laura Sanicola
FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County

By Laura Sanicola

NEW YORK (Reuters) - Oil prices dipped on Friday, erasing earlier gains, as new coronavirus cases spiked in the United States and China, and on growing concerns about rising U.S. output ticking up while crude stockpiles sat at record highs.

Brent crude futures were 34 cents lower at $40.72 at 11:12 EST (1512 GMT). U.S. West Texas Intermediate (WTI) crude futures were down 56 cents at $38.16.

Brent was on track for a weekly decline of 3.1% and U.S. crude was headed for a weekly drop of 3.6%, after record U.S. crude inventory data dragged prices down on Wednesday.

Earlier gains, supported by optimism over rising road traffic boosting fuel demand, were erased in early U.S. trading on fears that spiking COVID-19 infections in large gasoline-consuming U.S. states could stall the demand recovery. Cases have risen sharply in California, Texas, and Florida, the three most populous U.S. states..

Friday morning, Texas Governor Greg Abbott reversed the state's reopening plan, ordering most bars to close due to the surge in cases.

That could undermine the steady increase in refining output, with U.S. refiners now operating at nearly 75% of their capacity, per official government data.

"Gasoline production still appears mismatched against a weak pace of offtake that could see renewed softening should the coronavirus spread further," said Jim Ritterbusch of Ritterbusch and Associates.

GRAPHIC: April gasoline demand

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.

A survey of executives in the top U.S. 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.

U.S. rig count data is due later on Friday.

(Additional reporting by Shadia Nasralla in London, Aaron Sheldrick in Tokyo and Sonali Paul in Melbourne; editing by Kirsten Donovan)