© Reuters. FILE PHOTO: Oil pump cranes seen at Vaca Muerta shale oil and gas field in Patagonian province of Neuquen, Argentina, January 21, 2019. REUTERS / Agustin Marcarian / File Photo
From Sonali Paula
MELBOURNE (Reuters) – Oil prices fell on Thursday, cutting big gains from the previous two sessions amid uncertainty over short-term demand as cases of the highly contagious Omicron variant of the coronavirus rise worldwide.
West Texas Intermediate (WTI) crude futures slipped 20 cents, or 0.2 percent, to $ 82.44 a barrel at 5:03 a.m. GMT, after rising 1.7 percent in the previous session.
futures fell 19 cents, or 0.2%, to $ 84.48 a barrel, after rising 1.3% on Wednesday.
Data from the U.S. Energy Information Administration on Wednesday shows that demand for fuel has been hit by Omicron, with gasoline inventories increasing by 8 million barrels in the week to Jan. 7, compared to analysts’ expectations for a 2.4 million barrel increase.[EIA/S]
“Gasoline demand has been weaker than expected and still below pre-pandemic levels, and if that becomes a trend, oil will not be able to continue to rise,” OANDA analyst Edward Moya said in a note.
However, Moya added, Omicron’s influence is expected to be short-lived.
The market has previously fallen more than expected in crude oil inventories and the fact that inventories are at their lowest level since October 2018, pushing Brent and WTI to reach a two-month high on Wednesday.
“In reality, the EIA’s weekly report was less bullish than the headline, as total crude oil inventories fell 4.8 million barrels, but were more than offset by increased inventories of refined products,” Citi said in a note.
ANZ Research pointed to commercial flights that were 16% below the 2019 level in the week to January 11th. That was at least better than in the last week of December, when numbers fell 20% from pre-pandemic levels, according to FlightRadar 24.
However, U.S. inventories will grow as producers pave the way for faster production by widening the completion of wells in the country’s largest shale oil field, the Permian Basin in West Texas and New Mexico, according to research.
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