Demand Worries Drag on Oil Prices

Demand Worries Drag on Oil Prices

Oil prices fell Friday, dragged lower by growing worries that the pandemic will spur greater restrictions on travel and economic activity.

U.S. crude prices dropped around 1.4% to $52.38 a barrel, on track to end two sessions of gains. Oil has stayed in a tight trading range recently as investors weigh worries about crumbling consumption against large supply reductions.

Prices have increased steadily since the beginning of the year, with the U.S. benchmark passing $50 a barrel last month for the first time since early last year. That was when a production fight between major producers flooded global markets just as the pandemic's first round of shutdowns sent consumption plunging. An oil glut threatened to overwhelm storage, sending prices below $0 for the first time.

Signs that major producers intend to continue output cuts, as well as a faster-than-expected economic recovery in China, have since powered a rebound. Many traders now say further gains require an acceleration in demand from increased travel and a broader reopening.