Brent crude falls more than 1%, WTI below $70

Oil drilling rigs

Oil prices fell on Wednesday despite industry data showing that US crude inventories declined.

However, traders are concerned about supply outpacing demand from December.

The International Energy Agency (IEA) said a swell in COVID-19 cases with the emergence of the Omicron variant will lower global demand for oil while crude output is set to increase.

On the other hand, the Organization of the Petroleum Exporting (OPEC) raised its world oil demand forecast for the first quarter of 2022.

"The IEA's bearish view on the market was in stark contrast to OPEC's more positive view when it released its monthly outlook earlier this week. The divide suggests volatility is likely to remain high in the short term," Reuters reported, citing a note by ANZ commodity analysts.

Brent futures contracts for February fell 1.2% to $72.85 a barrel at 9 am Makkah time. WTI contracts for January declined 1.3% to $69.78 a barrel.

Elsewhere, American Petroleum Institute data showed US crude stocks fell by 815,000 barrels in the week ended Dec. 10.

The US Energy Information Administration will release official inventory data later today. The markets also await the US Federal Reserve's monetary policy decision later in the day.