Oil retreats from multi-month highs as surge in COVID-19 cases prompts fuel demand fears

Oil prices dropped for the first time in four days, retreating from as much as five-month highs as a continued surge in worldwide coronavirus cases undersold investors’ confidence in fuel demand recovery.

Brent crude fell 0.1%, or 4 cents, at $44.39 per barrel. U.S. West Texas Intermediate lost 0.2%, or 8 cents, at $41.62 per barrel. 

U.S. coronavirus cases continued to rise with the death toll over a thousand a day. Several states have scaled back plans on reopening economies.

Still, a decline in U.S. crude inventories supported oil prices. Crude oil stocks fell by 8.6 million barrels to 520 million barrels in the week ended August 1, compared with analysts’ expectations for a 3-million-barrel drop.

Adding to the market sentiment were signs that Democrats in the U.S. Congress and the White House have agreed on a deal over the new coronavirus aid package.

U.S. factory data also improved, offering consolation to fears of recovery risks. 

Meanwhile, Japan’s services sector fell for a sixth month in July, suggesting that economic activity in the country remained under pressure.