Oil falls as prolonged pandemic poses demand risks

Oil prices dropped on Thursday as major producers warned of fuel demand risks if the coronavirus pandemic prolonged, while U.S. crude stocks fell less than expected. 

Brent crude fell 0.8%, or 36 cents, at $45.01 per barrel. U.S. oil slid 0.9%, or 38 cents, at $42.55 per barrel.

U.S. crude inventories fell on its fourth consecutive week despite the increase in net imports. However, the 1.6 million-barrel drop for the week ended Aug. 14 was less than analysts’ expectations for a 2.7 million-barrel decline.

Fuel demand fell 14% year-on-year over the last four weeks, according to the Energy Information Administration.

Saudi Energy Minister Prince Abdulaziz bin Salman said that global oil demand should go back to pre-pandemic levels in the fourth quarter, but also urged the country’s OPEC+ partners to comply with the output cuts. 

Still, a draft OPEC+ statement said that a prolonged second wave of the coronavirus pandemic posed major risks for fuel demand recovery.

OPEC on its own has produced 30 million bpd of oil in the past decades, but these figures simmered down to 20 million to 22 million bpd during the pandemic.