(Reuters) – Oil prices dropped on Thursday, weighed down by concerns that U.S. economic recovery is slowing as the coronavirus outbreak lingers, while a renewed wave of COVID-19 cases in Europe have led to reimposed travel restrictions in several countries.
The jitters over demand and economic outlook due to the coronavirus resurgence have prompted a rally in the dollar as investors turned to safer assets, adding pressure to oil prices. A stronger dollar makes oil, priced in U.S. dollars, less attractive to global buyers.
U.S. West Texas Intermediate (WTI) crude CLc1 futures fell 60 cents, or 1.5%, to $39.33 a barrel at 0445 GMT, while Brent crude LCOc1 futures dropped 47 cents, or 1.1%, to $41.30 a barrel.
Both benchmarks climbed slightly on Wednesday after government data showed U.S. crude and fuel stockpiles dropped last week. Gasoline inventories fell more than expected, sliding by 4 million barrels, and distillate stockpiles posted a surprise drawdown of 3.4 million barrels.
Still, fuel demand in the U.S. remains subdued as the pandemic limits travel. The four-week average of gasoline demand was 8.5 million barrels per day (bpd) last week, the government data showed, down 9% from a year earlier.
Prices turned down after data showed U.S. business activity slowed in September, U.S. Federal Reserve officials flagged concerns about a stalling recovery, and Britain and Germany imposed restrictions to stem new coronavirus infections — all factors affecting the fuel demand outlook.
“Oil prices are wilting as product for immediate delivery remains plentiful,” said Jeffrey Halley, a senior market analyst at OANDA.