Oil prices are up Wednesday after industry data showed US crude stockpiles fell unexpectedly last week and China, the world’s second-biggest oil user, reported its lowest daily rise in Covid-19 cases, bolstering hopes of a pickup in demand.
Brent crude futures climbed 19c, or 0.3%, to $56.10 a barrel at 4.52GMT, adding to a small gain on Tuesday and bringing succour for beleaguered economies like Nigeria’s which depends on oil receipts.
US West Texas Intermediate (WTI) crude futures rose 20c, or 0.4%, to $52.81 a barrel, reversing Tuesday’s loss.
“WTI is slightly firmer on the back of a larger-than-expected draw in US crude inventories reported by the API, which is offset by builds in gasoline and distillates,” said Vandana Hari, oil market analyst at Vanda Insights.
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The American Petroleum Institute (API) reported crude oil inventories in the US, the world’s biggest oil consumer, fell by 5.3-million barrels in the week to January 22 compared with analysts’ expectations in a Reuters poll for a build of 430,000 barrels.
However, the data showed petrol stocks rose by 3.1-million barrels, which was much more than expected.
The API data showed distillate fuel inventories, which include diesel and heating oil, rose by 1.4-million barrels, compared with expectations for a draw of 361,000 barrels and refinery runs fell by 76,000 barrels per day.
Having climbed to multi-month highs at the start of the year, the rally in oil prices appears to have run out of steam and has been rangebound in recent weeks, analysts said.
“Market participants are now in ‘wait and see’ mode, wanting to see how lockdowns evolve in the coming weeks and months, and how successful countries are in rolling out Covid-19 vaccines,” ING economics said in a note.
Still, prices were supported by easing worries about a sharp drop in travel over the Lunar New Year in China, the world’s largest oil importer, as the number of Covid-19 cases appears to be declining.
Official data showed 75 new confirmed cases of Covid-19 on Wednesday, the lowest daily rise since January 11.
Typically, hundreds of millions of Chinese travel during the Lunar New Year holiday, which starts on February 11.
However, government officials have been urging people not to travel to help contain the recent increase in coronavirus infections.
In a note, ANZ Research cited Chinese ministry of transport estimates that the number of passenger trips taken will be down 40% from 2019.
