Oil down due to weak gasoline demand, uncertainty over omicron

By Ebru Sengul Cevrioglu

ANKARA (AA) - Oil prices decreased on Thursday due to the substantial rise in US gasoline inventories that signal low demand amid sustained uncertainty over the impact of the omicron coronavirus variant on oil markets.

International benchmark Brent crude was trading at $84.42 per barrel at 0617 GMT with a 0.3% loss after closing the previous session at $84.67 a barrel.

American benchmark West Texas Intermediate (WTI) traded at $82.41 per barrel at the same time for a 0.3% fall after it ended the previous session at $82.64 a barrel.

The more-than-expected decrease in US crude oil inventories was overshadowed by the large accrual in gasoline inventories, putting downward pressure on prices.

US commercial crude oil inventories decreased by 1.1% during the week ending Jan. 7, according to the latest data released by the Energy Information Administration (EIA).

Inventories fell by 4.6 million barrels to 413.3 million barrels, exceeding the market expectation of a 1.95 million-barrel drop.

However, gasoline inventories increased by 8 million barrels to 240.7 million barrels over that period, indicating weak demand.

Still, below pre-pandemic levels, the rise in gasoline inventories resulted in market jitters that this may become the start of a trend, signaling lower crude prices in the coming months.

Despite expectations that the new omicron variant will be mild and short-lived, the potential consequences on global oil demand for this year remain unknown.

The World Health Organization (WHO) head warned Wednesday that although the omicron variant may be less severe than delta, it remains a dangerous variant, particularly for the unvaccinated.

WHO Director-General Tedros Adhanom Ghebreyesus said at a coronavirus webinar that the record number of 15 million COVID-19 cases reported last week was an underestimate, although the death rate was stable.

One more region in China’s central Henan province has been put under lockdown on Wednesday after a surge in local COVID-19 cases, driven by the delta and omicron variants.

Spain recorded its highest number of coronavirus-related deaths since March at 247 in the last 24 hours, the Health Ministry said Tuesday.

The country has recorded nearly 135,000 daily cases, bringing the total to 7.59 million, while the overall death toll has hit 90,383.