Oil futures: Crude slides 6.5-7.5% on Covid worries, mixed EIA data

Quantum Commodity Intelligence - Oil futures were poised to close more than 2% down on Wednesday amid concerns regarding surging Covid cases could hit short term demand, particularly in China where travel restrictions have tightened, as well as mixed EIA data that showed crude and gasoline stocks headed in opposite directions.

Front-month October ICE Brent futures were trading at $70.67/barrel (1715 GMT), compared to Tuesday's settle of $72.41/b.

At the same time, September NYMEX WTI was trading at $68.44/b, versus Tuesday's settle of $70.56/b.

It's the third straight day of falls, meaning Brent is down 6.3% from Friday, while WTI has dropped 7.4%.

Energy Information Administration statistics showed a 5.3-million barrel draw in gasoline stocks to an 8-month low of 229 million barrels and against expectations of between a 1.8 million and 3.8 million barrel draw.

However, commercial crude stocks gained 3.6 million barrels to 439.2 million, against expectations of a draw of 879,000 to 3.1 million barrels.

Oil markets also trended lower on the weaker-than-expected report on US private payroll growth last month.

ADP reported that private-sector employers added back just 330,000 jobs in July, or fewer than half the expected gain of 690,000, according to Bloomberg consensus data.

Meanwhile, the governments of 31 provinces in China have advised residents to avoid leaving their regions unless necessary, and to stay away from four high-risk regions in the country, Xinhua reported.

Earlier, the potential bullish news of the possible hijacking of an oil tanker off the coast of the United Arab Emirates ended, the UK's Royal Navy reported.

But oil futures are on course to extend the week's losses on the back of rising Covid cases in Asia.

"In Indonesia, restrictions have been extended in some regions until Aug 9," noted brokers at Eagle Energy.

"Even prior to this decision the impact on energy demand from lockdowns in Indonesia were profound, with imports of motor fuel down 25% July 3-25 amid a 14% month-on-month decline in gasoline demand, according to the state-run energy company."

Latest data showed Australian mobility has fallen sharply in the last two weeks as major eastern states declared states of emergencies and imposed sweeping lockdowns, data showed Tuesday.

Overall mobility was down 20% versus a January 2020 baseline in the week ending 25 July, data from Google showed. This was down from an 8% shortfall at the end of June, the same data showed.