WTI crude oil is bouncing back after trading bearish early on Wednesday, overturning optimism from earlier this week even as markets try to assess the latest news that the Omicron variant may not be a cause for concern and could fail to affect global oil demand adversely. At the time of writing, WTI crude oil is trading at around $71.47 per barrel.

During the previous session, WTI oil strengthened by 3.7% on the news that the latest COVID-19 variant may not be as severe in terms of impact as previously feared. Medical experts, including the WHO, have insisted that while the variant may be more contagious, the likelihood of hospitalizations are far lower.

However, oil traders still maintain a cautious mood as they wait for more confirmation of this potentially good news. This mood could be the key reason behind the bearish price action in crude oil on Wednesday.

Even a decline in US crude inventories revealed by the release of the API report in the previous session failed to excite oil traders too much. According to the API, crude stockpiles in the US fell by a little over 3 million barrels over the previous week against economists’ forecast for a build by 2 million barrels instead.

Meanwhile, crude oil could also experience some volatility on updates regarding US-Iran nuclear talks in the coming days. While the latest round of indirect discussions broke down last week, they are scheduled to resume later this week. If they head in a positive direction, oil could face some pressure to the downside over hopes that Iran could be allowed to resume exports of the commodity again.