Oil falls on fuel demand growth concerns as coronavirus lingers

By Sonali Paul
MELBOURNE, Sept 24 (Reuters) - Oil futures fell on Thursday
on concerns the economic recovery in the United States, the
world's biggest oil consumer, is slowing as the coronavirus
outbreak lingers and a resurgence in European cases led to new
travel restrictions there.
Those fears prompted a rally in the dollar as investors
turned to safer assets, adding pressure to oil prices. A
stronger dollar makes oil, priced in U.S. dollars, less
attractive to global buyers. U.S. West Texas Intermediate (WTI) crude CLc1 futures fell
36 cents, or 0.9%, to $39.57 a barrel at 0217 GMT, while Brent
crude LCOc1 futures fell 28 cents, or 0.7%, to $41.49 a
barrel.
Both benchmarks climbed slightly on Wednesday after
government data showed U.S. crude and fuel stockpiles dropped
last week. Gasoline inventories fell more than expected, sliding
by 4 million barrels, and distillate stockpiles, which include
diesel and jet fuel, posted a surprise drawdown of 3.4 million
barrels. EIA/S
Still, fuel demand in the U.S. remains subdued as the
coronavirus pandemic limits travel. The four-week average of
gasoline demand was 8.5 million barrels per day (bpd) last week,
the government data showed, down 9% from a year earlier.
Prices turned down after data showed U.S. business activity
slowed in September, U.S. Federal Reserve officials flagged
concerns about a stalling recovery, and Britain and Germany
imposed restrictions to stem new coronavirus infections -- all
factors affecting the fuel demand outlook.
"As those demand concerns and comments from the Fed filtered
through, prices fell," said Commonwealth Bank commodities
analyst Vivek Dhar.
On the supply side, the market remains wary of a resumption
of exports from Libya, although it is unclear how quickly it can
ramp up volumes. Libya's National Oil Corp (NOC) seeks to boost
output to 260,000 bpd by next week. "That clearly is going to be something the oil market
doesn't need right now," Dhar said.
ANZ Research pointed to rising coronavirus cases in Europe
cutting travel demand, with air traffic now 60% below 2019
levels following a sharp drop over the past two weeks, according
to Eurocontrol data.