Gerald Herbert/AP
- Oil prices fell again on Thursday, following Wednesday's drop of as much as 6%.
- The sharp drop Wednesday followed weekly data from the Energy Department that indicated lower demand for gasoline.
- Oil prices soared roughly 30% over the last couple months leading up to the latest decline.
Oil prices declined further on Thursday, following the prior day's roughly 6% plunge for both Brent and West Texas Intermediate crude.
Brent, the international benchmark, fell 1.4% to $84.59 a barrel, and US prices dropped 1.6% to $82.90. The retreat comes after prices had climbed 30% over the last couple months.
The sharp drop Wednesday followed weekly data from the Energy Department that indicated lower demand for gasoline. And JPMorgan strategists cautioned that oil demand could weaken from the summer's high prices and a slowdown in seasonal travel.
"Demand destruction has begun (again)," JPMorgan's Natasha Kaneva said in a Wednesday. She has a year-end price target of $86 a barrel for oil, and noted that "global oil stock draws have ended."
Kaneva cited satellite observations from Platts that suggest global commercial crude inventories declined 8 million barrels during the first three weeks of September, while the oil product stocks surged 38 million barrels, resulting in a net increase in total oil liquids of 30 million barrels.
Reports also indicated that Russia was considering lifting its diesel export ban. At the same time however, Russia and Saudi Arabia will maintain their production cuts that had allowed crude prices to rally over recent weeks.
Meanwhile, the US dollar strengthened this week to a 10-month high, coinciding with the dip in oil prices over the last two days.
When the dollar is strong against rival currencies and oil prices are high at the same time, it exacerbates energy costs for other countries around the world, Saxo Bank strategists highlighted in a Monday note.