Oil prices fell 2 per cent on Thursday as investors worried the U.S. Congress may not agree on a stimulus package and as jobless numbers rose, while analysts prepared to cut energy demand forecasts as the number of coronavirus cases surges higher.
That price decline came despite the benefit of a drop in the dollar to a near 22-month low.
Brent futures fell 98 cents, or 2.2 per cent, to settle at $43.31 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 83 cents, or 2.0 per cent, to settle at $41.07.
The U.S. dollar was trading at its lowest against a basket of currencies since September 2018. A weaker dollar usually spurs buying of dollar-priced commodities, like oil, because they become cheaper for holders of other currencies.
But weak U.S. jobless numbers and a surge in coronavirus cases weighed on oil prices and stock markets.
“Oil prices fell along with the stock markets on worries about a (U.S.) stimulus package, a rise in jobless numbers and a decline in energy demand - all related to the continued rise in coronavirus cases,” said John Kilduff, partner at Again Capital LLC in New York.
The number of Americans filing for unemployment benefits unexpectedly rose last week for the first time in nearly four months.
U.S. Senate Republican leaders and White House officials tried to hammer out a proposal for a fresh round of coronavirus aid on Thursday. Democratic leaders, meanwhile, rejected the idea of passing a piecemeal bill.
U.S. coronavirus cases approached 4 million on Thursday, with more than 2,600 new cases every hour on average - the highest rate in the world, a Reuters tally showed.
“The trend for COVID-19 cases will likely result in downwards revisions in demand growth forecast from key market observers soon, including ourselves and the agencies, especially for the fourth quarter,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy.
Adding to the market uncertainty, U.S.-China relations deteriorated as Washington gave Beijing 72 hours to close its consulate in Houston after spying allegations.
The Chinese foreign ministry said the U.S. move had “severely harmed” relations and that China would be forced to respond.
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