Oil rally stutters on risk of new supply amid worsening demand

Oil headed for a third weekly decline in four — while managing to hold above $40 a barrel — amid signs fresh supply might be hitting the market as the demand outlook worsens.

Futures in New York were steady in early Asian trading after closing up 1% on Thursday. Crude had tracked Wall Street higher on news that House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin were open to resuming stimulus talks, although stocks later pared gains as investors dialed back optimism on the prospects for a compromise.

Futures for November are down almost 3% this week as the re-imposition of lockdown measures in countries including France and the U.K. casts doubt on the energy demand recovery. Oil traders, meanwhile, are reporting a sharp increase in Iraqi export cargoes for next month, and say they probably indicate higher overall output from the OPEC’s biggest producer after Saudi Arabia.