Oil prices down over COVID-induced demand fears

ANKARA

Crude oil prices dropped on Thursday over investor fears that new waves of the COVID-19 pandemic may hamper oil demand, while a more-than-expected drop in the US crude oil inventories limited further losses.

International benchmark Brent crude was trading at $70.77 per barrel at 0717 GMT for a 0.71% decrease after closing Tuesday at $71.28 a barrel.

American benchmark West Texas Intermediate (WTI) traded at $67.75 a barrel at the same time for a 0.89% fall after ending the previous session at $68.36 per barrel.

Fears that new mitigation measures and travel restrictions will emerge to counter the ongoing spread of the Delta variant of the COVID-19 virus continue to weigh on prices, casting doubts of a faster global economic and oil demand recovery.

The Swiss government said Wednesday that it will compel people to show proof of vaccination to enter restaurants and indoor events as health officials warn of a fourth COVID-19 wave.

South Korea reported over 2,000 new COVID-19 cases from another spike in infections after the country was hit by the Delta strain on August 3, local media reported.

Prices also came under pressure from the resumption of production in Mexico after a fire at an offshore platform halted more than 400,000 barrels per day (bpd) of output.

Octavio Romero Oropeza, the CEO of Mexico's state-owned oil company Petroleos Mexicanos (Pemex), said the company has recovered 71,000 bpd of the nearly 421,000 bpd of the oil output that had been shut down by the fire as of Tuesday evening.

The price slump came despite an unexpected drop in US crude oil inventories.

The US Energy Information Administration (EIA) announced Wednesday that the country’s crude oil inventories fell by 3 million barrels, or 0.7%, during the week ending August 20, signaling improving demand. With last week’s decline, crude stocks in the country have hit the lowest level since January 2020.