By Geoffrey Smith
Investing.com — Crude oil prices remained under pressure on Friday, struggling to hold above $40 a barrel after sliding Thursday in response to alarmingly weak second-quarter GDP figures and signs that the U.S. labor market is weakening again.
By 10:30 AM ET (1430 GMT), futures were down 0.1% at $39.87 a barrel, while futures were down 0.4% at $43.09 a barrel
, also, remained under pressure, falling 2.0% to $1.1600 a gallon after data showing a drop in in June and a downward revision to the University of Michigan’s index.
The day was dominated by the release of record quarterly losses by both Exxon Mobil (NYSE:) and Chevron (NYSE:), the U.S.’s two largest producers. That news followed ConocoPhilips’ announcement of a $1 billion loss earlier in the week.
Massive as the numbers were, they were still largely for the history books, with the spot market more concerned about the looming shift in supply-demand dynamics from next week. The Organization of Petroleum Exporting Countries is due to restore 2 million barrels of oil a day to world markets under the terms of its deal on output restraint with non-members such as Russia. That’s coming at a time when the rebound worldwide in fuel demand is under threat from a second wave of Covid-19, as more and more countries (notably Australia and the U.K. in the last 24 hours) re-tighten lockdown measures to stop local flareups.
In the U.S., there have been signs that the curve of new infections is flattening in the major fuel-consuming regions of California, Texas, and Florida. But with White House Task Force Coordinator Deborah Birx warning on Thursday that travel had been a major factor in the their second wave – and in a rising wave of cases across Midwestern states now – the threat to demand is still clear enough.
According to Gasbuddy’s Patrick de Haan, gasoline demand on Thursday was -4.50% from the week ago level, while for the five days through Thursday, it was down -0.9% on the corresponding period a week earlier.
Later Friday, the Energy Information Administration will release figures showing the depth of production shut-ins in the month of May. The figures will provide a rough guide to how quickly U.S. companies started to bring production back online after the lockdown shock.
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