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Oil prices fell for a third consecutive day on Wednesday on growing signs that supply growth will outpace demand next year, and as the World Health Organization (WHO) said COVID-19 vaccines may be less effective against the Omicron variant.

The market pared the day’s losses after U.S. crude inventories fell more than anticipated and implied consumer demand surged to a record in the most recent week in the United States, the world’s largest oil consumer.

Brent crude futures were down 29 cents, or 0.4 per cent, at $73.43 a barrel at 12:17 p.m. EST (1717 GMT), after losing 69 cents on Tuesday.

U.S. West Texas Intermediate (WTI) crude fell 38 cents, or 0.6 per cent, to $70.34 a barrel after losing 56 cents in the previous session.

“The oil market continues to wrestle between a recovery in demand and the fear that the recovery will be negatively impacted by the Omicron virus,” said Andrew Lipow, president at Lipow Oil Associates in Houston.

U.S. crude inventories sank by 4.6 million barrels last week and distillate and gasoline stocks also declined, weekly government data showed. Crude exports picked up sharply, while product supplied by refineries, a signal of consumer demand, hit a record 23.2 million barrels per day.

“It’s the first bullish report in quite some time,” said Bob Yawger, director of energy futures at Mizuho.

That said, oil analysts anticipate the Omicron variant will curb demand in the coming months.

The WHO said preliminary evidence indicated vaccines may be less effective against infection and transmission linked to the Omicron variant, which also carries a higher risk of reinfection.

U.S. officials said on Wednesday that coronavirus cases are on the rise, but said the combination of the two-shot vaccine and booster does still neutralize the disease.

Consumers have already started to alter travel plans and airline spending was declining as of last week, Bank of America research showed.

The International Energy Agency (IEA) said on Tuesday a surge in COVID-19 cases would dent global demand for oil while crude output is set to increase, especially in the United States, and supply is set to exceed demand at least until the end of next year.

In contrast, the Organization of the Petroleum Exporting Countries (OPEC) on Monday raised its world oil demand forecast for the first quarter of 2022.

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