Oil was down Wednesday morning in Asia, with investors digesting a surprise build in U.S. crude oil supplies and continuing to assess the impact of surging COVID-19 cases on fuel demand.
Brent oil futures were down 0.46% to $69.03 by 1:38 AM ET (5:38 AM GMT) and WTI futures fell 0.51% to $66.86.
U.S. crude oil supply data from the American Petroleum Institute released on Tuesday showed a build of 806,000 barrels for the week ended Jul. 16. Forecasts prepared by Investing.com had predicted a draw of 4.167 million barrels, while a 4.079-million-barrel draw was recorded during the previous week.
Should the build be confirmed in crude oil supply data from the U.S. Energy Information Administration, due later in the day, it would be the first since May.
Oil has been on a downward trend ever since hitting its highest levels since 2014 earlier in the month. The number of COVID-19 cases involving the Delta variant has soared globally and the Organization of Petroleum Exporting Countries and allies (OPEC+) resolutions of its dispute means increased production from August 2021 onwards.
This led Goldman Sachs Group Inc. (NYSE:GS) to warn oil will “gyrate,” and push back forecasts for a rally to $80 a barrel.
Some investors remained cautiously optimistic, however.
“The damage to re-openings from the Delta variant has certainly dented sentiment across the board when we look at commodities in general, but specifically to the oil markets... still, we would expect that the demand for oil continues to remain relatively robust. And we would expect
it to continue to recover,” UBS AG Wealth Management strategist Wayne Gordon told Bloomberg.
The black liquid’s losses were part of a widespread weakness across commodities, with gasoline, copper and iron ore also recording losses. The dollar, however, inched up on Wednesday, making commodities priced in the currency more expensive.