Oil drops on shock US stocks build and rise in China virus cases

Concerns rise with China’s announcement of fresh travel restrictions with further increase in COVID-19 Delta variant cases

By Sibel Morrow – August 05, 2021

(Anadolu Agency) – Oil prices dropped on Thursday over a surprise increase in US crude oil stocks and growing worries over the spread of the delta variant in China.

International benchmark Brent crude was trading at $70.28 per barrel at 0714 GMT for a 0.09% decrease after closing Wednesday at $70.34 a barrel.

American benchmark West Texas Intermediate (WTI) traded at $68.08 a barrel at the same time for a 0.10% drop after ending the previous session at $68.15 per barrel.

Oil prices came under pressure after the US Energy Information Administration (EIA) announced Wednesday that the country’s crude oil inventories rose by 3.6 million barrels, or 0.8%, during the week ending July 30, indicating lower demand.

Although gasoline inventories decreased by 5.3 million barrels during the same week, the worsening situation in China raised investor jitters over demand after the country announced countrywide travel measures on Wednesday to stem the spread of the virus.

The Wordometer tracking website reported that China recorded 95 new coronavirus cases on Wednesday, at least 71 of which were transmitted. This is highest the number of cases reported in China at least since January this year. The local train services have also halted in some areas in the country.

Rising tensions in the Middle East after reports of a tanker hijacking off the United Arab Emirates (UAE) coast limited further price declines.

Reports of a possible hijacking heightened regional tensions only days after the UK, US, and Israel blamed Iran for last week’s drone attack on the MV Mercer Street, which killed a Briton and a Romanian. Iran, however, denied any responsibility for the attack.

Many attacks on commercial vessels have been reported and linked to ongoing heightened tensions between Israel and Iran in recent months.

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