Oil holds near $44 as it heads for weekly drop on demand concerns

Brent crude was at $44.12 a barrel, heading for a 2.3% drop this week

Oil has recovered from April, when Brent slumped to a 21-year low. Reuters

Oil held around $44 a barrel on Friday and was heading for its biggest weekly decline since June, as weak demand figures added to concerns of a slow recovery from the Covid-19 pandemic.

A US government report showed domestic petrol demand fell in the latest week. Middle distillates inventories at Asia's oil hub Singapore have soared above a nine-year high, official data showed.

Brent crude, the international benchmark, was up 0.1 per cent to $44.12 a barrel, heading for a 2.3 per cent drop this week. Whereas, the US West Texas Intermediate fell to $41.34, set for the first weekly drop in five weeks.

“Demand concerns are firmly front and centre of traders' minds," said Stephen Brennock of oil broker PVM.

FGE analysts said rising coronavirus cases worldwide and renewed lockdowns would dash hopes of a drawdown in oil inventories for some time. The pressure remains on refiners to keep operating rates low, FGE said.

Oil has recovered from April, when Brent slumped to a 21-year low below $16 and US crude briefly went into negative territory.

A record supply cut since May by the Opec and allies, a grouping known as Opec+, has supported prices.

Opec began in August to ease the volume of the cutback, raising output by almost 1 million barrels per day according to a Reuters survey.