By Barani Krishnan
Investing.com - Oil prices settled almost 2% lower on Friday, falling for the second time in five days to a rebounding dollar and fears that global fuel demand will be crimped again by coronavirus-triggered lockdowns.
“In a normal world … I would think crude would be back in the 30s,” Scott Shelton, energy futures broker at ICAP (LON:NXGN) in Durham, North Carolina, said in his daily note, referring to the plethora of bearish factors against oil.
“But in the world we live in, with a tumbling USD, $2,000+ gold and GOBS of additional fiscal stimulus coming to keep the politicians in office, I think none of it matters to most people who trade oil,” he said, emphasizing the market’s disconnect from objective pricing.
U.S. crude’s benchmark U.S. West Texas Intermediate futures settled down 73 cents, or 1.7%, at $41.27 per barrel.
London’s Brent, the global barometer for crude, closed the New York session down 69 cents, or 1.5%, at $43.30.
“Keeping the price levels would be unrealistic,” Bjornar Tonhaugen of Rystad Energy said of this week’s rise. “Traders rushed to the task today to correct the gains, remembering the invisible enemy, COVID-19.”
Still, WTI rose 2.4% for the week and Brent showed a weekly gain of 2.5%, indicating that crude futures probably had more to lose.
The rise in Covid-19 infections remains the dominant issue for the fuel demand outlook. Cases in the United States are still rising in a number of states, while India recently reported a record daily jump in infections. More than 700,000 people have died in the worldwide pandemic.
Nearly 4.9 million Americans have been infected by Covid-19 so far, with a death toll reaching above 160,000, according to Johns Hopkins University. A model by the University of Washington has predicted 200,000 coronavirus deaths in the United States by Oct. 1, casting doubts on economic recovery.
Friday’s drop in oil prices came as the Labor Department said the United States added 1.8 million jobs in July, slowing from the 4.8-million jobs gain in June, as a new wave of coronavirus infections hampered labor market recovery.
The July jobs report, however, helped the dollar rebound from its free-fall mode and weigh on oil and other commodities. The Dollar Index, which pits the greenback against a basket of six currencies, was at 93.400 by 3:33 PM ET (20:33 GMT), up 0.7%, or its most in a day since March.