WTI bears in control into early Asia on covid concerns

  • WTI ends the day near the lows on the coronavirus spread.
  • Bears are concerned that demand will be sapped and an imbalance will prevail. 

At $67.96, US West Texas Intermediate (WTI) crude spot was down some 3.19% in the close of the US forex sessions, near to the lows of the day at $67.88 scored at the start of the day.

Prices fell for the third day in a row to a two-week low on Wednesday with a surprise build in US crude stockpiles and the negative US economic reports have not helped.

The US Energy Information Administration (EIA) said crude stockpiles rose by an unexpected 3.6 million barrels last week, while gasoline inventories fell by a bigger-than-forecast 5.3 million barrels. 

There are also concerns mounting over the spread of the coronavirus Delta variant that is expected to weigh on global energy demand.

The Delta variant poses new risks for the world’s second-biggest economy, China, which is a large consumer of oil.

”The market is pricing out some of the extreme tightness that was expected in coming months, which could be consistent with more widespread Chinese lockdowns,” analysts at TD Securities explained.

However, the analysts argued that China has ”previously found success in containing outbreaks with localized containment measures that have had only marginal impacts on commodity demand, but anxiety surrounding the delta-variant is growing nonetheless.”

”An underwhelming impact on demand would suggest that OPEC+’s cautious supply increases would still keep global energy markets on an extreme tightening trajectory,” analysts at TD Securities explained. 

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