Oil prices slip on uncertainty over U.S. recovery, stimulus

By Sonali Paul
MELBOURNE, Aug 7 (Reuters) - Oil prices slipped on Friday,
adding to losses in the previous session, on worries that fuel
demand growth will drop amid a resurgence of coronavirus cases
and as talks have stalled in the United States on a new stimulus
deal.
U.S. West Texas Intermediate (WTI) crude CLc1 futures
slipped 2 cents to $41.93 a barrel at 0246 GMT, while Brent
crude LCOc1 fell 6 cents, or 0.1%, to $45.03, after both
contracts had earlier traded higher.
However, WTI and Brent are both set for weekly gains of at
least 4%, the most for the two benchmark contracts since the
week ending July 3.
The resurgence of coronavirus infections remains the main
uncertainty in the oil market, as that will determine how fast
fuel demand rebounds. Tallies show infections in the United
States are rising in a number of states, including Colorado,
Ohio and Virginia. Rising cases remain the key uncertainty for fuel demand
growth and in turn oil prices, analysts said.
"It really comes down to the demand situation," said AxiCorp
market strategist Stephen Innes.
"We're caught in limbo trying to collect our thoughts on how
the (coronavirus) curve is going to work. Is the flattening in
the U.S. going to outweigh flare-ups globally?" he said.
Analysts were also watching the lack of progress in the
talks between the White House and Democrats over the next
coronavirus stimulus package, with Democrats saying President
Donald Trump may have to issue executive orders if he does not
want to negotiate further. "The virus relief package remains the last hope to boost
(fuel) demand, with the U.S. driving season coming to an end
soon," ANZ Research said in a note.
Over the week, a weaker U.S. dollar has helped support
higher oil prices, as oil is priced in U.S. dollars, making it
more attractive to crude buyers in other currencies.
The dollar index .DXY , which measures the greenback
against six major currencies, dropped to its lowest since May
2018 on Thursday.
While the index is up slightly today, the dollar is expected
to weaken ahead of U.S. non-farm payrolls data that are widely
expected to show jobs creation slowed in July from the previous
month amid a surge in COVID-19 infections.