Oil drops on demand worries, strong dollar

Oil prices fell in early Asian trade on Thursday despite a big drop in U.S. crude inventories, as the dollar’s strength and renewed fuel demand worries weighed on prices.

U.S. West Texas Intermediate crude futures slid 0.62%, or 33 cents, at $52.52 per barrel, losing gains made on Wednesday.

Brent crude futures was down 0.65%, or 36 cents, at $55.45 per barrel following a 10-cent loss on Wednesday.

Oil prices had been supported by a bigger-than-expected drop in U.S. crude stocks in the week ended Jan. 22, which analysts said was caused by an increase in U.S. crude exports and a decline in imports.

However, the focus is going back to demand worries amid a surge in coronavirus cases with new variants, a slow vaccine rollout in Europe, and travel restrictions in China.

Adding to demand fears, the world’s largest oil consumer, China is facing a surge in COVID-19 cases and planning to curb travel ahead of the Lunar New Year holiday.