Oil drops as demand worries overshadow Suez Canal blockage

Oil prices dropped over 2% on Thursday as new coronavirus restrictions raised fears about fuel demand, even as a stranded container ship blocked crude oil carriers in the Suez Canal.

Brent crude futures dropped 2.1%, or $1.33, at $63.08 per barrel after gaining 6% overnight. U.S. West Texas Intermediate crude futures lost 2.3%, or $1.40, at $59.78 per barrel following a 5.9% jump overnight.

Prices sharply rose on Wednesday on news of a grounding in the Suez Canal, which blocked 10 tankers carrying 13 million barrels of oil.

Prices were also supported by U.S. gasoline data showing demand improved and refinery run rates increased, as well as data showing strong Eurozone economic activity in March.

Still, analysts said that such factors were likely overshadowed by rising worries about global demand. 

Due to persistent demand fears and falling prices, investors are expecting OPEC and its allies to maintain its supply curbs in May.