Oil prices drop as US fuel stockpiles rise

Oil prices drop as US fuel stockpiles rise

/ Oil & Gas / Wednesday, 05 January 2022 10:11

Oil prices fell after US fuel supplies climbed, indicating low demand in the world's biggest oil consumer amid a massive spike in COVID-19 cases caused by the Omicron variant.

Brent crude futures fell 9 cents, or 0.11%, to $79.91 a barrel, while US West Texas Intermediate (WTI) crude futures fell 13 cents, or 0.17%, to $76.86 a barrel.

US gasoline stockpiles rose by 7.1 million barrels in the week to Dec. 31, the American Petroleum Institute (API) reported. Distillate stockpiles climbed by 4.4 million barrels in the week.

The growing stockpiles, which exceeded analysts' expectations, undermined the bullish outlook from investors during the previous session when price climbed more than 1% as market participants took the decision of major producers to add supply next month as a sign of confidence that surging COVID-19 cases would not hit demand for long. Analysts suggest the rising US production is weighing on oil prices.

Meanwhile, the Organization of the Petroleum Exporting Countries, Russia and allies, together called OPEC+ have agreed to add another 400,000 barrels per day of supply in February, as it has every month since August.

The group’s decision to stick their output increase is being seen in the light that Omicron will have a shorter impact on global energy demand.

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