LONDON  – Oil edged lower on Thursday as rising U.S. fuel inventories and concerns about surging coronavirus cases outweighed the impact of a weaker dollar, which usually boosts oil prices.

Oil eases as high U.S. oil stocks outweigh weak dollar-oil and gas 360

Source: Reuters

Brent crude LCOc1 fell 22 cents, or 0.5%, to $44.07 a barrel by 1351 GMT, while U.S. West Texas Intermediate (WTI) crude CLc1 shed 17 cents, or 0.4%, to $41.73.

The U.S. dollar index against a basket of currencies .DXY was trading near its lowest since early March. A weaker dollar usually spurs buying of dollar-priced commodities because they become cheaper for holders of other currencies.

“Genuine price support comes from the weak dollar, which helps physical oil demand,” said Tamas Varga of oil brokerage PVM.

Rising U.S. oil inventories, however, weighed on prices.

U.S. crude and distillate inventories rose unexpectedly and fuel demand slipped in the most recent week, the U.S. Energy Information Administration said on Wednesday, as a sharp rise in coronavirus cases starts to hit U.S. consumption. [EIA/S]

U.S. coronavirus cases approached 4 million on Thursday, with more than 2,600 new cases every hour on average – the highest rate in the world, a Reuters tally showed.

Barclays said on Thursday oil prices could experience a correction in the near term if a recovery in fuel demand slowed further, especially in the United States. The bank expects Brent to average $41 in 2020 and WTI to average $37.

Adding to uncertainty in the market, U.S.-China relations deteriorated as Washington gave Beijing 72 hours to close its consulate in Houston after spying allegations.

The Chinese foreign ministry said the U.S. move had “severely harmed” relations and that China would be forced to respond.

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