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Oil Down, Worries Grow that Crude Supply Growth Could Exceed Demand

Published 2021-12-14, 11:06 p/m
Updated 2021-12-14, 11:06 p/m
© Reuters.

© Reuters.

By Gina Lee

Investing.com – Oil was down Wednesday morning in Asia, on the third day of losses for the black liquid. Concerns that supply growth will outpace demand growth in 2022 are growing, even as the latest omicron COVID-19 variant is not expected to curb mobility as sharply as earlier variants.

Brent oil futures fell 1.04% to $72.93 by 11 PM ET (4 AM GMT) and WTI futures slid 1.19% to $69.89.

The International Energy Agency (IEA) on Tuesday said that surging COVID-19 cases, with omicron’s discovery, could dent global fuel demand at the same time as crude output is set to increase.

In comparison, the Organization of the Petroleum Exporting (OPEC) on Monday raised its global oil demand forecast for the first quarter of 2022.

"The IEA's bearish view on the market was in stark contrast to OPEC's more positive view when it released its monthly outlook earlier this week. The divide suggests volatility is likely to remain high in the short term," ANZ commodity analysts said in a note.

Supply is particularly set to increase in the U.S., where it is forecast to exceed demand through at least the end of 2022. Tuesday’s crude supply data from the American Petroleum Institute showed a draw of 815,000 barrels for the week ended Dec. 10. Forecasts prepared by Investing.com had predicted a 2.6-million-barrel draw while a 3.089-million-barrel draw was recorded during the previous week.

Investors now await crude supply data from the U.S. Energy Information Administration, due later in the day.

They also await the U.S. Federal Reserve’s policy decision, due later in the day, for clues on the central bank’s timeline for interest rate hikes. The European Central Bank, Bank of England, and the Bank of Japan are among the key central banks down policy decisions throughout the week.

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