Oil prices dipped on Wednesday after an industry survey revealed an unexpected build-up in U.S. oil stocks last week. This has been raising concerns about a revival of COVID-19 infections and might lead to a decrease in fuel consumption.
After increasing $1 on Tuesday, West Texas Intermediate oil futures in the United States fell 35 cents, or 0.5 %. This brought it down to $66.85 a barrel at 0153 GMT.
Brent crude futures slid 32 cents, or 0.5 per cent, to $69.03 a barrel, giving up some of the 1.1 per cent rise seen on Tuesday.
According to ING Economics analysts, the market has undergone a slight downward pressure in early morning trade today. Following a negative and somewhat surprising inventory report from the API. According to two market sources quoting American Petroleum Institute data, oil stockpiles in the United States increased by 806,000 barrels in the week ending July 16.
In comparison, Reuters polled ten analysts, who projected that crude stocks declined by approximately 4.5 million barrels on average.
Investors are waiting for data from the United States. The Energy Information Administration will scrutinize to see if it confirms an increase in crude inventories. That would stop an eight-week streak of inventory drawdowns. Data on U.S. oil stocks will lead the price changes today and possibly tomorrow. According to Dhar, The central theme will be the OPEC+ agreement to add 400,000 barrels per day per month versus whether demand will hold up given what we see on the Delta variant.
The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, increase supply by 400,000 barrels per day (BPD) each month from August to December.
That has exacerbated demand concerns as cases of the Delta variant of the coronavirus increased in significant markets. These include the United States, the United Kingdom, and Japan. While gasoline demand has grown throughout the peak summer months, an increase of Delta variant COVID-19 instances is weighing on the prognosis.
Lastly, the Delta dread has an excellent grip on oil market sentiment. That casting significant doubt over the recent demand comeback narrative” said Vandana Hari, energy analyst at Vanda Insights. However, global demand expects to average 99.6 million barrels per day (mbd) in August, up 5.4 mbd from April.