Oil prices fell for a third straight day early on Wednesday as concerns about demand amid surging Delta COVID variant continue to weigh on market sentiment.
As of 9:13 a.m. EDT on Wednesday, before the weekly EIA inventory report, WTI Crude was down below $70 per barrel again, after dipping briefly below that mark on Tuesday. WTI Crude traded at $69.09, down 2.08%. Brent Crude was trading down by 1.60% at $71.25.
Soaring COVID cases with the fast-spreading Delta variant were front and center in the oil market on Wednesday, trumping geopolitical tensions with incidents with oil tankers in the Gulf of Oman.
Surging cases in China prompted authorities to order mass testing and travel restrictions. The city of Wuhan, the ground zero for the coronavirus, will test all its 12 million residents. Travel restrictions and the spread of the Delta variant became a source of concern for the oil market that fuel and industrial demand in China, the world's largest oil importer, could take a hit. COVID is also resurging in the biggest economy, the United States, and many other countries from Europe to Southeast Asia and Australia.
The latest COVID scare outweighed concerns about supply from the Middle East, where a tanker was reportedly a target of a hijacking attempt off the coast of the UAE.
Further weighing on oil prices early on Wednesday was the American Petroleum Institute's (API) estimate from Tuesday of a smaller-than-expected draw in crude oil inventories of 879,000 barrels for the week ending July 30.
"The American Petroleum Institute reported a sizeable and higher-than-expected drawdown in US gasoline inventories for the week ended July 30, but the impact on sentiment was offset by a modest and below-expected drop in crude stocks," Vanda Insights said in a note early on Wednesday.
The API also estimated that Cushing inventories rose by 659,000 barrels last week. If the EIA confirms today a rise at Cushing stocks, it would be the first rise in crude inventories at the WTI delivery hub in eight weeks.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More