Oil fell in Asian morning trade on Thursday, despite the massive drop in US crude oil inventory. The increase in the US dollar, fuel demand, travel restrictions and concerns over delays in coronavirus vaccines negatively affect the prices.
Brent crude futures fell 36 cents, or 0.65%, to $55.45 a barrel, after losing 10 cents on Wednesday.
West Texas Intermediate (WTI) crude futures fell 33 cents, or 0.62%, to $52.52 a barrel at 0452 GMT, erasing Wednesday’s gain.
The US dollar index rose to 90,753 from the January low of 89,206, and then put pressure on dollar-priced commodities, causing investors to turn to other commodities rather than dollar-priced oil.
The oil market was supported by a surprisingly large drop in US crude oil stocks earlier this week.
With the increase in COVID-19 infections, the slow spread of the vaccines in Europe, and travel barriers in countries such as China, attention has turned to demand concerns.
China, the world’s second-largest oil consumer, is currently facing an increase in coronavirus cases and is trying to limit travel as it enters the Lunar New Year holiday, normally the busiest travel season of the year. The Ministry of Transport of China estimated that the amounth of trips to be made will increase by 15% compared to last year when the virus was exacerbated, but will decrease by 40% compared to 2019.
The UK, which has been under lockdown since Jan 4 on Wednesday, has declared 10-day quarantine for the people from high-risk COVID-19 countries, and stricter travel restrictions for its people.
Australia extended its suspension of quarantine-free travels with the Pacific Island country New Zealand on Thursday.
The economic backdrop remains uncertain as states fight the spread of COVID-19.