Oil prices erase gains in U.S. trade, set for weekly falls

Oil prices dipped on Friday, erasing earlier gains, on concerns about rising new coronavirus cases in the United States and China and expectations of U.S. output ticking up while crude stockpiles linger at record highs.

Brent crude LCOc1 futures were 13 cents lower at $40.92 at 1342 GMT. U.S. West Texas Intermediate (WTI) crude CLc1 futures were down 33 cents at $38.39.

The contracts are on track for weekly falls of around 3.1% and 3.6%, respectively, after record U.S. crude inventory data dragged prices down on Wednesday.

Earlier gains, supported by some optimism over rising road traffic boosting fuel demand, were erased in early U.S. trading.

“Markets have got ahead of themselves and with the coronavirus pandemic still doing the rounds, there remains plenty of volatility on the horizon,” PVM analysts said.

There are fears that a spike in COVID-19 infections in southern U.S. states could stall the demand recovery, especially as some of those states, such as Florida and Texas, are among the biggest gasoline consumers.

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.

The prospect of increased U.S. crude production also kept a lid on gains on Friday.

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 RIG-OL-USA-BHI is due later on Friday.