Oil prices, which fell earlier this week after OPEC+ agreed to increase supply, fell again as an unexpected rise in US crude stockpiles and rising COVID-19 infections threatened demand. However, prices retained most of the gains from the previous session amid expectations that supply will remain tight until the end of the year.
Brent crude, which rose 4.2% in the previous session, fell 11 cents, or 0.2%, to $72.12 a barrel at 0644 GMT. West Texas Intermediate (WTI) crude, which rose 4.6% on Wednesday, fell 6 cents, or 0.1%, to $70.24 a barrel.
Volatility in energy remains high as traders grapple with short-term demand weakness stemming from Delta variant concerns and the expectation that crude deficits will continue through the end of the year.
Oil will struggle to recoup its losses until new restrictions in Southeast Asia, Australia and Europe begin to loosen.
While analysts expect a 4.5 million-barrel drop in the United States’ crude inventories, the world’s largest oil consumer, crude inventories rose unexpectedly by 2.1 million barrels last week for the first time since May, according to data from the U.S Energy Information Administration and rose to 439.7 million barrels.
Gasoline and distillate stocks were recorded at 121,000 barrels and 1.3 million barrels respectively, indicating high demand during the summer driving season.
Organization of the Petroleum Exporting Countries and their allies (OPEC+), including Russia, are unlikely to control the market anytime soon, and virus restrictions posing the biggest risk to market fundamentals are still on the agenda and the Iran talks postponed.
Analysts expect global demand to increase by 5.4 billion barrels from April to an average of 99.6 million barrels per day (mbd) in August.
