Oil closes slightly lower, regaining most of an early 3% drop
The silhouette of an oil pump is seen at sunset.
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Oil prices fell on Thursday, at one point touchig their lowest since early August as U.S. unemployment data fed fears of a slow recovery for the economy and fuel demand a day after weak U.S. gasoline demand data.
Brent crude fell 30 cents, or 0.7%, to $44.13 a barrel. West Texas Intermediate crude futures settled 14 cents, or 0.34%, lower at $41.37 per barrel.
Both benchmarks fell more than 2% earlier in the session.
U.S. stock prices sank as investors sold high-flying tech stocks and worried about economic recovery after Labor Department data showed the number of Americans filing new claims for unemployment reached a seasonally adjusted 881,000 for the latest week. Continuing claims remained high, with millions out of work.
A day earlier both oil benchmarks fell more than 2% after U.S. Energy Information Administration (EIA) data showed domestic gasoline demand last week fell to 8.78 million barrels per day (bpd) from 9.16 million bpd a week earlier. Consumption of other oil products also fell.
“The market failed to react positively to the drawdown in inventories and then threw in the towel for the Labor Day weekend,” said Phil Flynn, analyst at Price Futures Group in Chicago.
Analysts warn that upcoming refinery maintenance and the end of the summer driving season could also limit crude demand.
WTI crude has come under pressure “after U.S. refiners earmarked a long list of maintenance closures over the coming months that will no doubt impact demand for crude oil”, ANZ Research said in a note on Thursday.
Due to shutdowns ahead of Hurricane Laura, U.S. refinery utilization rates fell by 5.3 percentage points to 76.7% of total capacity, the EIA said. Some analysts believe processing will not rebound in the fall.
“These factors suggest a seasonal drop-off in refinery runs and higher oil inventory levels as we advance through September,” AxiCorp market strategist Stephen Innes said.