Oil dips, heading for weekly loss as virus cases rise

Oil prices dipped on Friday after steep falls in the previous session and were set for a weekly decline on worries renewed lockdowns following a surge in coronavirus cases in the United States and elsewhere will suppress fuel demand.

Brent crude was down by 7 cents, or 0.2%, at $42.28 a barrel by 0114 GMT after falling more than 2% on Thursday. U.S. oil fell 13 cents, or 0.3%, at $39.49 a barrel after a drop of 3% in the previous session.

Brent is heading for a weekly decline of more than 1% and U.S. crude is on track for a fall of nearly 3%.

While many analysts are expecting economies and fuel demand to recover from the pandemic, record daily increases in coronavirus infections this week in the United States, the world`s biggest oil consumer, raised concerns about the pace of any recovery.

"Renewed coronavirus outbreaks in some parts of the world have added to reasons to expect the recovery to slow in the months ahead," Capital Economics said in a note.

In Australia, the government on Friday will consider reducing the number of citizens allowed to return to the country from overseas, after authorities ordered a new lockdown of the country`s second-most populous city, Melbourne.

The United States had around 56,000 COVID-19 cases on Thursday, the third consecutive day new infections have exceeded at least 55,000, according to a Reuters tally. On Wednesday, U.S. cases topped 60,000, the biggest daily increase in any country since the outbreak started.

Oil inventories also remain bloated due to the evaporation of demand for gasoline, diesel and other fuels during the initial outbreak.

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U.S. crude oil inventories rose by nearly 6 million barrels last week after analysts had forecast a decline of just over half that figure