Oil prices fell on Wednesday as gasoline stocks in the United States increased. The decline signals lower demand in the world’s largest oil user despite a major increase of COVID-19 cases linked to the Omicron variant.
Brent oil prices declined nearly 9 cents( 0.11 %) to a total price of $79.91 per barrel At 0537 GMT. WTI crude futures were also down 13 cents( 0.17 %), to $76.86 a barrel. The API announced late Tuesday that gasoline stocks in the United States increased by 7.1 million barrels in the week ending December 31. Stockpiles of distillate increased by 4.4 million barrels last week.
The rising stockpiles outperformed analysts’ expectations. This movement shattered investors’ bullish outlook from the previous session. The price increased by more than 1% in the previous session, as market players read major suppliers’ plan to increase supply next month as a sign of optimism that rising COVID-19 cases would not depress demand for long.
Meanwhile, the Organization of Petroleum Exporting Countries, Russia, and its allies, known as OPEC+, agreed on Tuesday to increase production by 400,000 barrels per day in February, as it has done every month since August. Forecasts expected a draw of 3.400 million barrels, compared to 3.090 million barrels the week before. Investors are now anticipating crude oil supply data from the US Energy Information Administration, released later today.
Outlook on The Oil Market
The OPEC’s decision to maintain its output rise reflected their belief that Omicron’s influence on world energy demand would have a limit. On the other hand, pricing may be impacted by the sobering realization that nations are still on high alert. Moreover, governments are unwilling to ease restrictions as long as infection rates continue to rise. Additionally, geopolitical issues such as Russia-Ukraine tensions and the resurrected Iran nuclear deal might support a higher oil price.