Oil prices were down on Friday over negative projections on the future of oil demand and as a strong dollar is ramping up prices for non-US currency holders and discouraging investors.
International benchmark Brent crude was trading at $42.67 per barrel at 0640 GMT for a 1.14% decrease after closing Thursday at $43.16 a barrel.
American benchmark West Texas Intermediate (WTI) was at $40.51 a barrel at the same time for a 1.09% decrease after ending the previous session at $40.96 per barrel.
Oil prices came under pressure based on projections of a slower-than-expected rebound in global oil demand.
According to the International Energy Agency's (IEA) World Energy Outlook (WEO) 2020 report released this week, the global oil demand is forecast to only recover to pre-crisis levels by around 2023.
During a technical committee of the Organization of the Petroleum Exporting Countries (OPEC) and allied oil producers, a group that is known as OPEC+, Secretary- General Mohammad Barkindo said the worst of the current crises is over.
He added: “Our forecast for 2020 oil demand remains at slightly more than 90 million barrels per day, a 10 percent decline for the year.”
The US dollar index, which measures the value of the American dollar against a basket of currencies including the Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc, reached its highest level of October at 93.80 earlier Friday. This strong dollar rate is putting pressure on oil prices and making the commodity costlier for other currency holders.
Another blow to decreasing oil prices was the unexpected increase in US jobless claims.
Last week, the number of Americans filing new claims for unemployment compensation soared, signaling that the COVID-19 pandemic is causing long-term damage to the labor market.
A total of 898,000 jobless claims were filed, representing a week-on-week increase of 53,000. Analysts expected applicant numbers in the region of 825,000.
-US crude oil inventories fall
However, further price declines were limited by a more-than-expected decline in US crude oil inventories last week.
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