Oil falls amid COVID-19-induced demand worries, stronger dollar
Oil fell on Thursday on fresh fuel demand worries because of travel curbs to prevent new coronavirus outbreaks and delays with vaccines and a stronger dollar weighed on prices.
The United States West Texas Intermediate (WTI) crude futures fell 36 cents, or 0.7 per cent, to $52.49 a barrel at 0738 GMT, erasing Wednesday’s gain.
Brent crude futures fell 46 cents, or 0.8 per cent, to $55.35 a barrel, after losing 10 cents on Wednesday.
The dollar index, which measures the currency against other major currencies, rose to 90.753 from a January low of 89.206.
Buyers, using other currencies must pay more for dollar-denominated oil when the currency rises.
The oil market had been supported earlier this week by a large decline in US crude stockpiles in the week to January 22.
But attention is now turning back to demand concerns amid a rise in COVID-19 infections with contagious new variants, a slower rollout of vaccines in Europe, and travel curbs in countries such as China.
Stricter vaccine checks by the European Union and delivery hold-ups from AstraZeneca and Pfizer have slowed the rollout of shots in the bloc.
Adding to the demand worries, China, the world’s second-largest oil consumer, is now facing a surge in coronavirus cases and seeking to limit travel as it heads into what is normally the busiest travel season of the year, the Lunar New Year holiday.
The Chinese Ministry of Transport has forecast the number of trips that will be taken will be up 15 per cent from last year when the virus was raging, but down 40 per cent from 2019.
Data out later on Thursday will likely show the economy of the US, the world’s biggest oil user contracted in 2020 at its sharpest pace since 1946 because of the COVID-19 outbreak.
“The economic backdrop remains uncertain as governments struggle to fight off the spread of COVID-19,’’ ANZ Research said in a note.
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