Oil prices continued to decline by more than 1%, during trading today, Wednesday, as US crude fell below the level of $ 70 a barrel, ahead of the release of data on crude stocks in the United States.
Crude prices are heading for the third consecutive daily decline, with expectations growing that the supply of crude will exceed demand over the next year.
The drop in oil prices came despite the fact that the new Omicron mutant did not limit mobility as sharply as the previous mutant from Covid-19.
Oil prices today
Brent crude futures prices – February 2022 delivery – decreased by about 1%, recording $73 a barrel.
The prices of West Texas Intermediate crude futures – January delivery – also fell by 1.1%, recording $69.93 a barrel.
The International Energy Agency expected, on Tuesday, that the increase in cases of the emerging coronavirus with the emergence of the Omicron mutant will reduce global demand for oil at a time when crude production is scheduled to rise, especially in the United States.
On the other hand, the Organization of Petroleum Exporting Countries “OPEC” raised, last Monday, its forecast for global demand for oil for the first quarter of 2022.
“The IEA’s bearish view of the market was in stark contrast to the more positive Opec view when it released its monthly outlook earlier this week,” said commodity analysts at ANZ.
“The gap indicates that volatility is likely to remain elevated in the short term,” he added, Reuters reported.
Energy consultancy VGE said it had a more optimistic forecast from the International Energy Agency, as it expects a smaller surplus of 400,000 barrels per day, based on relatively low demand risks from Omicron, versus the IEA’s forecast of 1.7 million barrels per day in First Quarter.
Another factor affecting the market is the appreciation of the US dollar, which makes dollar-priced commodities more expensive relative to other countries.
Markets are awaiting the outcome of the US Federal Reserve’s policy meeting on Wednesday, for clues about when the US central bank might raise interest rates.
US oil stocks
In another bearish indication, data showed that US oil inventories last week did not fall as much as expected.
Data from the American Petroleum Institute showed that US crude inventories fell by 815,000 barrels in the week ending Dec. 10, according to market sources, compared to a 2.1 million barrel drop expected by 10 analysts polled by Reuters.
But distillate stocks fell 1 million barrels compared to analyst expectations, an increase of 700,000 barrels, and gasoline stocks rose by 426,000 barrels, which was less than expected.
Weekly data from the US Energy Information Administration is due later on Wednesday.