Crude oil prices increased during the week ending Oct. 16 with a more-than-expected decline in US crude oil inventories although negative outlooks mostly prevailed during the week.
International benchmark Brent crude was trading at $42.71 at 1102 GMT on Friday, posting a 0.71% increase from Monday when it traded at $42.41 per barrel at 0631 GMT.
American benchmark West Texas Intermediate (WTI) traded at $40.56 at the same time on Friday relative to $40.16 a barrel on Monday.
Oil markets started the week with low oil price levels, with investor concerns about the continuance of a supply glut on the global oil market.
As an indicator of short-term production in the country, the number of US oil rigs rose by four to 193 last week compared to the previous week, signaling greater output and raising oversupply concerns.
The return of US energy firm crews to offshore platforms along the Gulf of Mexico and Norwegian workers to rigs after the end of a 10-day strike along with the resumption of Libyan oil to the market put further downward pressure on prices.
However, concerns slightly abated after the World Health Organization's (WHO) top scientist said COVID-19 vaccines would probably be available in December or early 2021 for submission to regulators for approval, which raised hopes of a demand recovery.
-Negative projections prevail week
Although OPEC projected lower oil demand of 9.47 million barrels per day in 2020 in its monthly report released on Tuesday, the group estimated a bullish divergence in demand in 2021. Expectations, though, remained below pre-COVID levels.
The International Energy Agency (IEA) suggested a more negative projection in its World Energy Outlook (WEO) 2020 report, estimating that global oil demand would only recover to pre-crisis levels by around 2023.
Further feeding weak demand concerns, Fitch Ratings said 2021 global airline traffic would be down by more than 30% from the level in 2019, which would take until 2024 to regain globally.
In its latest World Economic Outlook, the International Monetary Fund (IMF) also highlighted the elevated uncertainty prevailing in the oil market, as the COVID-19 pandemic is not yet under control.
-US relief pack talks subside, jobless claims increase
Diminishing hope of a US stimulus package to aid economic recovery from the coronavirus pandemic effects also spurred the price slump. After US President Donald Trump said the talks could only resume after elections in November, Treasury Secretary Steven Mnuchin confirmed that a new economic relief bill is unlikely before the election. Mnuchin’s remark came after an hour-long conversation with House Speaker Nancy Pelosi.
The negative economic environment in the country, which is already battling increasing coronavirus cases, was shaken more after an unexpected increase in US jobless claims.
Last week, the number of Americans filing new claims for unemployment compensation soared with a week-on-week increase of 53,000, indicating that the COVID-19 pandemic is causing long-term damage to the labor market.
-US crude oil inventories fall
However, the more-than-expected fall in US crude oil inventories last week limited further price declines.
Data released by the country's Energy Information Administration (EIA) showed that commercial crude oil inventories in the US fell by 3.8 million barrels last week relative to the market expectation of a 2.8 million-barrel draw.
By Sibel Morrow