Oil prices drop for the sixth day in their extensive losing streak since February 2020. The sharp increase in COVID-19 cases has raised fears of declining fuel demand.
After hitting the lowest earlier in the session, Brent crude was down 1.6%, at $ 67.12.
U.S. West Intermediate crude (WTI) fell 2.1%, to $ 64.11. WTI fell more than 7%, while Brent fell more than 6% during a six-day downturn series, the longest since February 28, 2020.
The drop in oil prices is due to the spread of coronavirus infections of the Delta variant, especially during the last month. Craig Erlam, the senior market analyst at OANDA Europe, said prices were still vulnerable in mid-summer.
In response to the increase in COVID-19 cases, slow growth is happening in China. In response, the epidemiological situation in the U.S. has led to a drop in oil prices over the past week.
The sudden rise in gasoline stocks in the U.S. last week has raised concerns about declining demand as demand for gasoline typically peaks in the Northern Hemisphere in the summer.
According to the Energy Administration, gasoline inventories amounted to 228.2 million and increased by 696,000 barrels.
However, it is noteworthy that U.S. stocks fell 3.2 million barrels last week to $ 435.5 million. This is the lowest rate since January 2020.
When Will the Oil Price rise?
The general manager of research at Nissan, Hiroyuki Kikukawa, said that the U.S. peak summer driving season is closing soon as the country should boost output.
According to the EIA’s monthly report, U.S. oil output should increase to 8.1 million barrels per day in September. It will be the highest result since May 2020.
Experts predict that oil prices will continue under pressure shortly, at least until the epidemiological situation stabilizes. In response, not a single dollar remained behind the attention of investors and reflected on their mood.
Suppose the U.S. Federal Reserve starts to cut its vast stimulus this year. In that case, it will affect the dollar’s value in oil and make it more expensive for other currency holders.
It is not yet known further steps to stop the oil price reduction. However, the fact is that the oil price is currently under pressure due to the global situation. If the cases of Covid 19 stabilize or decrease, the problem may change a lot.