Business

The oil falls for a sixth straight day, sinking to its lowest level since May for fear of slowing growth

The pumping oil rigs are located next to a table grape vineyard seen on July 8, 2021, north of Bakersfield, California.

George Rose | Getty Images

Oil fell for a sixth consecutive session Thursday, falling to its lowest level since May as demand dreaded and comments from the Federal Reserve that it will suspend its bond-buying program sent prices down.

Crude oil has come under pressure amid weakness in the commodities market and action more generally.

West Texas Intermediate Crude Oil futures, the U.S. oil benchmark, jumped $ 2.38, or 3.6%, to trade at $ 63.08. The contract is on its daily loss strip the longest since February 2020, and is now down more than 8% for the week. International Brent crude oil decreased 3.2% to $ 66.02 a barrel.

The dollar advanced Thursday after minutes from the July meeting of the Federal Reserve which indicated plans to retire at the pace of its monthly bond purchases. A strong dollar can put pressure on oil since it makes goods more expensive for foreign buyers.

Weak data outside of China has also pushed up crude in recent sessions after data released on Monday showed the economy has slowed more than expected in July. In addition, the country’s refinery production has fallen to its lowest level in 14 months.

“Concerns about demand due to the global spread of the Delta variant continue to prevent any higher prices,” Commerzbank analysts wrote in a recent note to customers.

U.S. Energy Information Administration data released Wednesday showed a surprise in gasoline stocks, which raised fears of a weaker end than expected in the summer driving season.

“Even though the summer driving season still has three weeks to go, it is already clear that it will not meet high expectations,” Commerzbank added.

Oil made a formative return during the first half of the year when demand returned and producers kept supply in check. But the moment began to settle in July when the delta variant spread. WTI has now fallen 18% from its last high of $ 76.98 as of July 6th.

“There are also too many questions about the outlook for crude demand for the coming months and what weighs on crude oil prices,” said Ed Moya, senior market analyst at Oanda. “Following the release of the Fed Minutes, risk aversion has won and oil prices have returned to session lows,” he added.

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