Oil drops for second day as supply-driven rally loses momentum
Oil prices fell after US crude stockpiles unexpectedly rose and doubts resurfaced over demand as COVID-19 cases continued to rise worldwide and some regions faced gasoline shortages.
Brent crude was down $1.41, or 1.8%, to $77.68 a barrel as of 0608 GMT. It fell nearly $2 on Tuesday after hitting a nearly three-year high of $80.75.
West Texas Intermediate (WTI) oil prices dropped $1.34 or 1.9% to $73.89, having fallen 0.2% in the previous session.
While some producing countries are seeing supply disruptions, oil prices are seeing higher wages as economies recover from pandemic lockdowns and fuel demand increases.
U.S. oil, gasoline and distillate stockpiles rose last week, according to market sources based on Tuesday's figures from the American Petroleum Institute.
Analysts await official data from the US Energy Information Administration on Wednesday as crude oil stockpiles are expected to decline.
There were relative strength indexed speculative fluctuations in both contracts in the overbought zones yesterday.
Although the supply environment has not changed much, oil prices reaching 80 USD per barrel will put pressure on OPEC+ countries to increase their production quotas. However, traders are still waiting for the Organization of the Petroleum Exporting Countries (OPEC) and its allies to decide to keep supply tight when they meet next week.
OPEC said on Tuesday that oil demand is expected to grow strongly over the next few years, warning that the world must continue to invest in production to avoid a crisis even as it transitions to less polluting forms of energy.
China is the world's largest oil importer and the second largest consumer of fossil fuels after the United States. China's weakening housing market and rising power cuts are weighing on sentiment as any chaos caused to the world's second-largest economy will likely have a knock-on effect on oil demand.
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