Oil prices erase gains in early U.S. trade, set for weekly fallsOil prices erase gains in early U.S. trade, set for weekly falls
FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County

By Shadia Nasralla

LONDON (Reuters) – Oil prices dipped on Friday, erasing earlier gains, as concerns about rising new coronavirus cases in the United States and China and expectations of U.S. output ticking up while crude stockpiles linger at record highs.

Brent crude futures were 17 cents lower at $40.88 at 1233 GMT. U.S. West Texas Intermediate (WTI) crude futures were 39 cents at $38.33, erasing previous gains.

The contracts are on track for weekly falls of around 3% and 3.5%, respectively, after record U.S. crude inventory data dragged prices down on Wednesday. [EIA/S]

Earlier gains, supported by some optimism over rising road traffic boosting fuel demand, were erased in early U.S. trading.

“Markets have got ahead of themselves and with the coronavirus pandemic still doing the rounds, there remains plenty of volatility on the horizon,” PVM analysts said.

GRAPHIC: April gasoline demand https://fingfx.thomsonreuters.com/gfx/ce/yzdvxrrybvx/SC.JPG

Fears linger that a spike in COVID-19 infections in southern U.S. states could stall the demand recovery, especially as some of those states, such as Florida and Texas, are among the biggest gasoline consumers.

The global economic outlook has also worsened or at best stayed about the same in the past month, a majority of economists polled by Reuters said, and the recession underway is expected to be deeper than earlier predicted.

The prospect of increased U.S. crude production also kept a lid on gains on Friday.

A survey of executives in the top U.S. oil and gas producing region by the Dallas Federal Reserve Bank found more than half of executives who cut production expect to resume some output by the end of July.

U.S. rig count data is due on Friday.

(Additional reporting by Aaron Sheldrick in Tokyo and Sonali Paul in Melbourne; editing by Steve Orlofsky and Jason Neely)