Title: Oil slips by more than 1% on rising supply, Omicron

Dec 15, 2021 06:35AM ET

By: AnalysisWatch

Oil costs succumbed to a third consecutive day on Wednesday on mounting proof that supply development will overwhelm request one year from now and as the World Health Organization said COVID-19 antibodies against the Omicron variation might be less powerful.

Brent unrefined prospects fell 80 pennies, or 1.1%, to $72.90 a barrel at 11:11 GMT, subsequent to losing 69 pennies on Tuesday.

U.S. West Texas Intermediate (WTI) crude futures fell 88 cents, or 1.2 percent, to $69.85 a barrel after losing 56 cents in the previous session.

The Brent contract for the first month is trading at a small premium to the second month after briefly trading at a small discount on Tuesday.

The WHO said on Wednesday that preliminary evidence suggests that vaccines are less effective against infection and transmission associated with the Omicron coronavirus variant, which also carries a higher risk of reinfection.

The International Energy Agency (IEA) said on Tuesday that an increase in COVID-19 cases with the emergence of the Omicron variant will dampen global oil demand while, at the same time, crude oil production, especially in the United States, will increase and supply will exceed demand at least until the end of next year.

Interestingly, the Organization of the Petroleum Exporting Countries (OPEC) on Monday raised its estimate for worldwide oil interest in the main quarter of 2022.

Another bearish indicator is industry data showing that US crude inventories did not decline as much as expected last week.

Data from the American Petroleum Institute showed US crude inventories fell by 815,000 barrels in the week ended 12 December, compared with a decline of 2.1 million barrels expected by 10 analysts polled by Reuters.

However, distillate stocks fell by 1 million barrels, while analysts had expected a 700,000-barrel increase, and gasoline stocks rose by 426,000 barrels, a smaller build than expected.