CommoditiesOil Prices Slip But Remain above $75 a barrel Despite Large Inventory Drawdown

Oil prices slipped but remained near $75 per barrel on Thursday as crude stockpiles in the United States, the world’s top oil consumer, fell last week to their lowest since January 2020 and imports and production dropped.

Brent crude futures fell 5 cents, or 0.1%, to $74.69 a barrel by 0108 GMT

U.S. West Texas Intermediate (WTI) crude oil futures slipped by 4 cents, or 0.1%, to $72.35 a barrel.

oil chart
U.S WTI Performance Chart

Crude inventories fell by 4.1 million barrels in the week to July 23, the U.S. Energy Information Administration (EIA) said, helped by lower imports and a decline in weekly production.

Oil has whipsawed throughout July and is set for only the second monthly loss since October after the virus comeback coincided with an OPEC+ agreement to boost output from August. The fast-spreading delta variant has led to renewed restrictions in some regions and raised concerns about short-term demand, although there are expectations the market will continue to tighten.

“There appears to be quite a bit of hesitancy to push the market in either direction, leaving it in a holding pattern. There is still uncertainty over the demand picture, with COVID-19 cases continuing to tick higher.” Warren Patterson, the head of commodities strategy for ING.

The U.S. economic recovery is still on track despite a rise in coronavirus infections, the Federal Reserve said on Wednesday in a new policy statement that remained upbeat and flagged ongoing talks around the eventual withdrawal of monetary policy support. The central bank left interest rates at 0%.

Still, some worries on fuel demand remain with gasoline demand in the United States and Europe beginning to plateau. Analysts note that globally, pre-pandemic demand levels may not be seen until beyond next year if coronavirus infections and the slow pace of vaccinations further entrenches structural changes in demand.

COVID-19 continues to inflict a devastating toll on the Americas, with Argentina, Colombia, Cuba, Ecuador and Paraguay among the countries with the world’s highest weekly death rates, the Pan American Health Organization said.

Read also; Oil Prices Edge Higher, U.S Crude Inventories Fall Sharper than Expected.

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