# Oil prices slip as U.S. fuel inventories rise
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-01-05
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Oil Prices Fall as U.S. Fuel Stockpiles Rise Amid Omicron
Meta Description: Oil prices fell on Wednesday due to rising U.S. fuel stockpiles, reflecting lower demand in the biggest oil consumer amidst Omicron variant surge.
URL: https://financedigest.com/oil-prices-slip-as-u-s-fuel-inventories-risehtml

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By Mohi Narayan

NEW DELHI (Reuters) -Oil prices dropped on Wednesday after U.S. fuel stockpiles climbed, indicating declining [demand in the world’s biggest oil](https://www.financedigest.com/oil-gains-after-iea-sees-demand-rising-to-record-high.html "Oil gains after IEA sees demand rising to record high") consumer amid a massive spike in COVID-19 cases caused by the Omicron variant.

Brent crude futures fell 9 cents, or 0.11%, to $79.91 a barrel at 0537 GMT, while U.S. West Texas Intermediate (WTI) crude futures fell 13 cents, or 0.17%, to $76.86 a barrel.

U.S. gasoline stockpiles rose by 7.1 million barrels in the week to Dec. 31, the American Petroleum Institute (API) reported late on Tuesday. Distillate stockpiles climbed by 4.4 million barrels in the week. \[API/S\]

The surging stockpiles, which exceeded analysts’ expectations, undermined the bullish outlook from investors during the previous session when [price climbed more than 1% as market participants took the decision of major producers to add supply next month as a sign of confidence that surging](https://www.financedigest.com/explainer-oil-price-surge-changes-ecb-narrative-only-at-the-margins.html "Explainer-Oil price surge changes ECB narrative only at the margins") COVID-19 cases would not hit demand for long.

“Rising U.S. production as more and more producers find it lucrative to return to the well [pad is weighing on oil prices,”](https://www.financedigest.com/4-for-the-price-of-1-what-you-can-buy-in-the-uks-top-northern-cities-for-the-price-of-a-london-pad.html "4 for the price of 1: What you can buy in the UK’s top northern cities for the price of a London pad") Sugandha Sachdeva, vice president of commodities research at Religare Broking said.

Meanwhile, the Organization of the Petroleum Exporting Countries, Russia and allies, together called OPEC+, on Tuesday agreed to add another 400,000 barrels per day of supply in February, as it has every [month since August](https://www.financedigest.com/august-the-most-popular-month-to-start-a-holiday-home-search-reveals-portal.html "AUGUST THE MOST POPULAR MONTH TO START A HOLIDAY HOME SEARCH REVEALS PORTAL").

The decision to stick their output increase reflected the [group’s view that Omicron will only have a short-lived impact](https://www.financedigest.com/uk-report-warns-of-impact-of-islamist-groups-in-prisons.html "UK report warns of impact of Islamist groups in prisons") on global energy demand.

Two consecutive days of strong gains have put crude in over-bought territory,” said Vandana Hari, founder of Vanda Insights, provider of oil [market analysis](https://www.financedigest.com/dry-ice-market-2015-outlook-current-and-future-industry-landscape-analysis-2025.html "Dry Ice Market 2015 Outlook, Current and Future Industry Landscape Analysis 2025").

[Market sentiment will continue](https://www.financedigest.com/continual-inventions-to-accelerate-the-banana-flakes-market.html "Continual Inventions To Accelerate The Banana Flakes Market") to see-saw, Hari said.

One the one hand, there may be [growing hope that the Omicron variant may herald COVID-19’s shift from pandemic to a more easily manageable disease](https://www.financedigest.com/growing-burden-of-periodontal-diseases-to-increase-mouthwash-usage.html "Growing Burden of Periodontal Diseases to Increase Mouthwash Usage"), at least in the highly vaccinated parts of the world.

But on the other, [prices may be hit](https://www.financedigest.com/uk-shop-price-inflation-hits-record-8-in-january-brc.html "UK shop price inflation hits record 8% in January: BRC") by a sobering realisation that countries remain on high alert, and governments are not ready to relax restrictions as long as infections are spiking.

(Reporting by Mohi Narayan and Sonali Paul; Editing by Christian Schmollinger and Kenneth Maxwell)


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