Oil prices nudged lower on Wednesday and taking a breather after a strong rally this week. Prices are spurred by the loss of a quarter of Mexico production after a fire on an oil platform and signs that China, the world’s biggest importer, has curbed the recent coronavirus outbreak.
Brent crude futures dropped 9 cents, or 0.1%, to $70.96 a barrel by 0639 GMT, while West Texas Intermediate (WTI) crude futures fell 19 cents, or 0.3%, to $67.35 per barrel.
Both benchmark contracts rose by about 8% over the previous two days, tolerating most of the slump from a seven-day losing streak.
Last week’s losses were mostly driven by the fears that the spread of the Delta variant of the coronavirus in Asia would slow the region’s economic recovery.
A second consecutive day of price rally in the crude market had also let some profit-taking, while American Petroleum Institute data expressing a less-than-expected decline in U.S. oil inventories last week supported the downward pressure.
Prices rallied following a more than 400,000 barrels per day drop in supply in Mexico after a fire on an oil platform, but the state oil firm said they expect to restart production by Aug. 30 anyway.
Brent crude should remain fairly supported despite today’s tight oil market which is under control supply wise and that won’t change anytime soon.
American Petroleum Institute data showed crude inventories fell 1.6 million barrels for the week ended Aug. 20, and it is said by undisclosed sources, gasoline stockpiles fell 1 million barrels.
However, analysts were expecting crude stockpiles to fall by 2.7 million barrel and gasoline stocks to drop by 1.6 million barrels.
Official data from the U.S. Energy Information Administration is due to be released on Wednesday at 1430 GMT.
Oil has benefited from the relief of Delta concerns at the world’s two largest economies, the U.S. and China, but that is not necessarily the case in Sydney and Japan.
In a promising sign that the spread of Delta infections was easing in China, the country on Wednesday reported just 20 new confirmed coronavirus cases for Aug. 24, down from 35 a day earlier. There is also a pick-up in traffic in Beijing and Shanghai as an evidence of the Delta variant.
As a matter of fact, improvements in the airline industry may be in trouble amid some ongoing restrictions. The loss of Mexican supply looks relatively equal to planned output increases in August from the Organization of the Petroleum Exporting Countries and its allies.
