Oil dropped to $66 a barrel Thursday, lowest since May, majorly caused by concerns about weaker demand as COVID-19 cases rise, a stronger U.S. dollar and a surprising increase in U.S. gasoline inventories.
“The longer-than-anticipated battle against the invisible enemy has made investors cautious and pragmatic, leading to gradually softer prices,” said Tamas Varga of oil broker PVM.
“The potential withdrawal of monetary support, the chaotic Taliban takeover of Afghanistan that threatens with another migrant crisis and worries about the continuous spread of the virus keep the dollar in demand, which, in turn, acts as a break on any attempted oil-price rally.”
The dollar hit a nine-month high, weighing on dollar-priced commodities.
Brent crude was down $2.10, or 3.1%, at $66.13 at 0905 GMT, after touching its lowest since May 21. U.S. West Intermediate (WTI) fell $2.28, or 3.5%, to $63.18 after falling as low as $62.96, also its lowest since May 21.
Both Brent and U.S. crude have declined for six days in a row, the longest losing streak since a six-day drop for both contracts that ended on Feb. 28, 2020.
“Concerns about dampening demand expectations as a result of an increase in coronavirus cases worldwide have contributed to the drop,” said Naeem Aslam of Avatrade, a broker.