Oil struggles to hold gains amid mixed demand view

Oil struggles to hold gains amid mixed demand view

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Oil prices slipped on Thursday, paring sharp gains from the previous two sessions, amid uncertainty about short-term demand amid a global surge in cases of the highly contagious Omicron variant of the coronavirus.

U.S. West Texas Intermediate (WTI) crude futures were down 7 cents, or 0.1%, at $82.57 a barrel by 0221 GMT, after rising 1.7% in the previous session.

Brent crude futures fell 6 cents, or 0.1%, to $84.61 a barrel, after rising 1.3% on Wednesday.

Fuel demand was hit by Omicron, with gasoline inventories rising by 8 million barrels in the week to Jan. 7, compared with analysts’ expectations for a rise of 2.4 million barrels, U.S. Energy Information Administration data showed on Wednesday.

“Gasoline demand was weaker-than-expected and still below pre-pandemic levels, and if this becomes a trend, oil won’t be able to continue to push higher,” OANDA analyst Edward Moya said in a note.

However, Moya added, the Omicron impact is expected to be short-lived.

Earlier the market had latched on to a bigger drawdown than expected in crude inventories and the fact that stockpiles are at their lowest since October 2018.

“In reality, the weekly EIA report was less bullish than the headline number, as total crude oil inventories fell 4.8 million barrels but were more than offset by a stock build across refined products,” Citi said in a note.

ANZ Research pointed to commercial flight numbers running at 16% below 2019 levels for the week to Jan. 11. That was at least better than in the last week of December, when numbers were down 20% on pre-pandemic levels, according to FlightRadar 24.

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