Oil falls as COVID-19 spike stokes fuel demand fears; still set for big weekly gain

TOKYO, Nov 13 (Reuters) - Oil prices fell in early trade on
Friday as a spike in the number of COVID-19 infections raised
fears for the global economy and near-term fuel demand, but
remained on track for a second straight weekly gain amid hopes
for a vaccine.
U.S. West Texas Intermediate (WTI) crude CLc1 futures
dropped 40 cents, or 1.0%, to $40.72 a barrel by 0118 GMT,
having lost 0.8% on Thursday. Brent crude LCOc1 was down 36
cents, or 0.8%, at $43.17 a barrel, after dropping 0.6% on
Thursday.
For the week, both were headed for a surge of about 10%.
U.S. government data also added to pressure, as crude
inventories rose by 4.3 million barrels last week, compared with
an expected fall of 913,000 barrels. "Surging cases of coronavirus cases across the globe have
fanned concerns over weaker fuel demand," said Kazuhiko Saito,
chief analyst at commodities broker Fujitomi Co.
"Views that it would take time to see any benefit from a
COVID-19 vaccine also prompted investors to unwind their long
positions," he said, adding that WTI looks to be headed toward
around $39.5 a barrel by a chart.
New coronavirus infections in the United States and
elsewhere are reaching record levels and tightening economic
restrictions to contain the spread have dampened the prospect of
a near-term end to the global health crisis.
Hopes that such a resolution might be on the horizon have
risen this week - stoking the jump in both WTI and Brent
contracts - after data showed an experimental COVID-19 vaccine
being developed by Pfizer Inc PFE.N and Germany's BioNTech
22UAy.DE was 90% effective. But the International Energy Agency (IEA) said on Thursday
that global oil demand is unlikely to get a significant boost
from the roll-out of vaccines against COVID-19 until well into
2021. Analysts say tougher restrictions on mobility to deal with
sky-rocketing coronavirus cases mean the Organization of the
Petroleum Exporting Countries (OPEC) and its allies, known as
OPEC+, may hesitate to implement a planned loosening of output
curbs agreed in a deal earlier this year.
Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman
said earlier this week that the OPEC+ deal could be adjusted if
there is consensus among members of the informal producers'
group on a need to hold off on easing production cuts.
"The market has largely discounted a likely delay in
tapering of cuts," Fujitomi's Saito said.