Oil drops towards $66, lowest since May on demand concerns amid Covid surge

Oil dropped towards $66 a barrel on Thursday to its lowest since May, pressured by concerns about weaker demand as Covid-19 cases rise, a stronger US dollar and a surprise increase in US gasoline inventories.

Circulation of the Delta variant in areas of low vaccination is driving transmission of Covid-19, the World Health Organization said.

“The longer-than-anticipated battle against the invisible enemy has made investors cautious and pragmatic, leading to gradually softer prices,” said Tamas Varga of oil broker PVM.

“The potential withdrawal of monetary support, the chaotic Taliban takeover of Afghanistan that threatens with another migrant crisis and worries about the continuous spread of the virus keep the dollar in demand, which, in turn, acts as a break on any attempted oil-price rally.”