# Oil retreats on surprise rise in U.S. stocks, weakening demand outlook
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-07-21
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Oil Prices Fall as U.S. Inventories Rise, Delta Variant
Meta Description: Discover how unexpected oil inventories surge in the U.S. is impacting fuel demand and market sentiment. Stay informed with Reuters.
URL: https://financedigest.com/oil-retreats-on-surprise-rise-in-u-s-stocks-weakening-demand-outlookhtml

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By Sonali Paul and Roslan Khasawneh

SINGAPORE (Reuters) -Oil prices fell on Wednesday after an industry report showed an unexpected build-up in U.S. oil inventories last week, which heightened [worries about a resurgence in COVID-19 infections potentially dampening fuel demand](https://www.financedigest.com/oil-falls-on-demand-worry-as-fed-make-or-break-moment-approaches.html "Oil falls on demand worry as Fed ‘make or break moment’ approaches").

Brent crude futures fell 52 cents, or 0.8%, to $68.83 a barrel at 0354 GMT, giving up Tuesday’s 1.1% gain.

U.S. West Texas Intermediate (WTI) crude futures dropped 50 cents, or 0.7%, to $66.70 a barrel, after rising $1 on Tuesday.

The market “has come under a bit of downward pressure in early morning [trading today after a bearish and rather surprising inventory report from the API,” ING](https://www.financedigest.com/ing-toughens-oil-and-gas-policy-to-include-trade-finance-midstream.html "ING toughens oil and gas policy to include trade finance, midstream") Economics analysts said in a note, referring to weekly figures from the American Petroleum Institute.

U.S. [crude stocks](https://www.financedigest.com/oil-dips-after-fed-comments-us-crude-stock-build.html "Oil dips after Fed comments, US crude stock build") rose by 806,000 barrels for the week that ended July 16, according to two market sources, citing American Petroleum Institute figures.

By comparison, 10 analysts polled by Reuters had estimated, on average, that [crude stocks](https://www.financedigest.com/oil-near-flat-as-us-crude-stock-draw-contends-with-economic-concerns.html "Oil near flat as US crude stock draw contends with economic concerns") fell by about 4.5 million barrels.

[Investors are awaiting](https://www.financedigest.com/oil-steadies-after-dipping-on-china-outlook-investors-await-fed-clues.html "Oil steadies after dipping on China outlook; investors await Fed clues") data from the U.S. [Energy Information Administration to see](https://www.financedigest.com/energy-squeeze-could-see-berlins-gaslights-flicker-out.html "Energy squeeze could see Berlin’s gaslights flicker out") whether it confirms there was an increase in crude inventories, which would end an eight-week streak of inventory drawdowns.

The price moves [today and potentially tomorrow](https://www.financedigest.com/in-planning-for-today-dont-lose-sight-of-tomorrow-avoiding-short-termism.html "In planning for today, don’t lose sight of tomorrow – avoiding short-termism") will be driven by U.S. oil stocks data, but the biggest thematic will be the OPEC+ deal to add 400,000 barrels per day a month versus whether [demand will hold up given what we’re seeing](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") on the Delta variant,” Commonwealth Bank analyst Vivek Dhar said.

A deal by the Organization of the Petroleum Exporting Countries and allies, together known as OPEC+, to boost supply by 400,000 bpd each month from August through December sparked an oil price selloff on Monday, exacerbated by [demand fears](https://www.financedigest.com/oil-rises-on-demand-hopes-as-banking-crisis-fears-subside.html "Oil rises on demand hopes as banking crisis fears subside") with cases of the Delta variant of the coronavirus picking up in major markets like the United States, Britain and Japan.

While fuel [demand has improved during the peak summer months, a surge in Delta variant COVID-19 cases is taking a toll on the demand outlook](https://www.financedigest.com/oil-prices-rebound-after-opec-upgrades-china-demand-outlook.html "Oil prices rebound after OPEC upgrades China demand outlook").

The Delta dread has a rather [firm grip of the oil](https://www.financedigest.com/uk-oil-gas-firms-to-leave-years-worth-of-output-in-ground-with-tax-hikes-report.html "UK oil, gas firms to leave year’s worth of output in ground with tax hikes-report") market sentiment, having put a big question-mark over the demand rebound narrative of the past several weeks,” said Vandana Hari, energy analyst at Vanda Insights.

Crude may eke out some modest gains in the coming days, but it is hard to [see prices jumping](https://www.financedigest.com/uk-retailers-see-40-jump-in-boxing-day-shoppers-springboard.html "UK retailers see 40% jump in Boxing Day shoppers -Springboard") to the higher orbits any time soon,” said Hari.

(Reporting by Sonali Paul in Melbourne and Roslan Khasawneh in Singapore. Editing by Gerry Doyle and Richard Pullin)


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