Oil prices fell on Thursday, curbing the massive gains from the previous two sessions amid uncertainty over short-term demand as cases of the highly contagious Omicron variant of the coronavirus surged worldwide.
Brent crude futures fell 19 cents, or 0.2 percent, to $84.48 a barrel after rising 1.3 percent on Wednesday.
West Texas Intermediate (WTI) crude futures fell 20 cents, or 0.2%, to $82.44 a barrel after climbing 1.7% in the previous session.
Data from the U.S. Energy Information Administration (EIA) on Wednesday showed fuel demand took a hit from Omicron, as fuel demand increased by 8 million barrels per week through January 7th.
Gasoline demand remained weaker than expected and below pre-pandemic levels, raising concerns about rising oil prices. However, the problem is thought to be short-lived as Omicron’s effect is expected to be short-lived.
The market was locked in a larger-than-expected decline in crude oil inventories, with inventories at their lowest level since October 2018 pushing Brent and WTI to two-month highs on Wednesday.
Although overall crude oil inventories have fallen, the increase in stocks in refined products’ is offset.
The commercial flight figures for the week of January 11th, which were 16% below 2019 levels, is at least better than the week of December 24, when numbers fell 20%.
Meanwhile, in the US, supply will increase as producers expand the performance of facilities in the Permian Basin of west Texas, and New Mexico which are the nation’s top shale oil field.