Oil prices continued their decline on Thursday amid a high inventory build-up in the US and rising numbers of Covid-19 Delta cases.
Brent, the international benchmark, fell 0.11 per cent to trade at $70.30 per barrel at 11.19am UAE time. West Texas Intermediate, the main US gauge, was flat at $68.19 per barrel.
Brent and WTI sank 2.8 per cent and 3.4 per cent, respectively, on Wednesday – their biggest fall in two weeks – as the US added more oil stocks amid rising supply.
US oil inventories rose by 3.63 million barrels, registering its biggest gain since March, according to the Energy Information Administration.
"The official US crude inventories delivered the knockout," Jeffrey Halley, senior market analyst, Asia Pacific at Oanda, said. "Markets completely ignored an equally significant tumble in gasoline stocks of -5.3 million barrels, sending Brent crude 2.80 per cent lower to $70.30 a barrel. WTI, meanwhile, collapsed by 3.10 per cent to $68.05 a barrel."
Material sell-offs in oil will be short-lived and this will be followed by equally vigorous rallies, Mr Halley added.
Commodity prices have been weakened by a resurgence in Covid-19 cases. The highly transmissible Delta variant, which originated in India, is behind the rise in infections as countries reopen their economies.
On Thursday, global cases of Covid-19 surpassed the 200 million mark and the death toll from the virus reached 4.2 million, according to Worldometer, which tracks the pandemic.
Commodity prices also fell following comments by US Federal Reserve vice-chairman Richard Clarida on tapering interest rates through to 2022, with a potential hike in 2023.
The US dollar and bond yields rose following the comments, but depressed crude and other commodities.
"Industrial commodities generally were hit by the hawkish turn in the dollar with both aluminium and copper prices sinking," Emirates NBD said in a note on Thursday.
"Gold saw some extremely wide moves, surging in response to the weak ADP [employment] numbers before crashing quickly afterwards on the rise in UST [US Treasury] yields. Gold prices, in the end, closed nearly unchanged at $1,812/troy oz [$58,212.85 per kilo]," the report added.
Oil prices also shrugged off tensions in the Gulf, where a suspected drone attack on Mercer Street on July 29 resulted in the deaths of two crewmen.