Oil Prices Drop After Unexpected Rise in U.S. Crude Inventories

Oil prices slid on Thursday after an unexpected rise in U.S. crude oil stockpiles and as rising COVID-19 cases threaten demand. 

Prices however held on to most of their gains from the previous session on expectations that supplies will remain tight through year-end.

Brent crude fell 32 cents, or 0.4%, to $71.91 a barrel at 04:47 WAT, after rising 4.2% in the previous session. U.S. West Texas Intermediate (WTI) crude fell 27 cents, or 0.4%, to $70.03 a barrel, after rising 4.6% on Wednesday.

Crude inventories in the United States, the world's top oil consumer, rose unexpectedly by 2.1 million barrels last week to 439.7 million barrels, up for the first time since May, U.S. Energy Information Administration data showed.

Still, petrol and distillate inventories posted draws of 121,000 barrels and 1.3 million barrels, respectively, indicating higher demand due to the summer driving season.

With OPEC+, comprising the Organization of the Petroleum Exporting Countries and allies like Russia, unlikely to get the market soon and Iranian negotiations delayed, the most relevant risk to market fundamentals remains a deterioration of demand due to new virus restrictions, analysts from Citi said.

Earlier this week, oil prices plunged following a deal by OPEC+ to boost supply by 400,000 barrels per day from August through December.