Oil drops to $66, lowest since May

Oil fell to $66 per barrel on Thursday, its lowest level since May, weighed down by concerns about reduced demand as COVID-19 cases mount, a higher US dollar, and a surprising increase in US gasoline stocks.

Coronavirus-related mortality in the United States has increased in the last month. The longer-than-expected war against the invisible adversary has made investors cautious and pragmatic, resulting in increasingly lower prices, said Tamas Varga, an oil dealer at PVM.

The potential withdrawal of monetary assistance, the chaotic Taliban control of Afghanistan, which risks another migration catastrophe, and concerns over the virus’s continued spread keep the dollar in demand.

The dollar reached a nine-month high, putting pressure on dollar-priced commodities.

Brent crude

Brent crude was down $2.10, or 3.1 percent, at $66.13 at 0905 GMT, having hit a low of $66.13 on May 21. The West Texas Intermediate (WTI) crude oil price plummeted $2.28, or 3.5 percent, to $63.18 after plunging as low as $62.96, its lowest since May 21.

Both Brent and US crude has fallen for six days in a row, the most extended losing sequence since a six-day decrease for both contracts on February 28, 2020. Concerns about dampening demand expectations resulting from an increase in coronavirus infections worldwide have contributed to the dip, said Naeem Aslam of trader Avatrade.

The International Energy Agency cut its oil demand forecast last week because of the introduction of the Delta variant. OPEC, on the other hand, maintained its demand predictions. An unexpected increase in gasoline stockpiles in the United States in a weekly supply report added to demand concerns, considering that demand the motor fuel peaks typically during the northern hemisphere summer.

The strong US currency is exacerbating the situation. The dollar has risen on hopes that the Federal Reserve will begin unwinding its stimulus program this year.

Gold prices fell

Gold prices dipped on Thursday as the dollar rose after the minutes of the Federal Reserve’s policy meeting revealed that its officials mainly agreed to begin reducing bond purchases this year. Following a strong July nonfarm payrolls report, gold fell to a more than the four-month low of $1,684.37.

On Wednesday, SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, saw its holdings drop to their lowest level since mid-April 2020.

Silver futures slid 1.6 percent to $23.10 per ounce. Platinum fell 0.8 percent to $986.49 per ounce.

Palladium declined 0.3 percent to $2,418.86 after touching a low of $2,409.68 on March 16.

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