Author of the article:
Reuters
Sonali Paul and Isabel Kua
SINGAPORE — Oil prices slid on Wednesday as industry data showed U.S. crude stockpiles rose more than expected and on worries a rebound in COVID-19 cases in top importer China would hurt fuel demand.
Brent crude futures fell 44 cents, or 0.5%, to $94.92 a barrel by 0454 GMT, while U.S. West Texas Intermediate (WTI) crude futures fell 53 cents, or 0.6%, to $88.38 a barrel. The benchmarks fell around 3% on Tuesday.
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U.S. crude oil inventories rose by about 5.6 million barrels for the week ended Nov. 4, according to market sources citing American Petroleum Institute figures, while seven analysts polled by Reuters estimated on average that crude inventories would rise by about 1.4 million barrels.
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Last week, the market had latched on to hopes that China might be moving toward relaxing COVID restrictions but over the weekend health officials said they would stick to their “dynamic-clearing” approach to new infections.
COVID cases in Guangzhou and other Chinese cities have surged, with the global manufacturing hub becoming the country’s newest COVID epicenter.
“With that (China reopening) narrative getting pushed back, coupled with a considerable build on U.S. inventory data, implying dimming U.S. demand, the recessionary crews are back out in full force this morning in Asia,” Stephen Innes, managing partner at SPI Asset Management, said in a note.
CMC Markets analyst Tina Teng said despite tight supply in the physical markets, China’s slowdown in demand has a major impact on the oil futures markets.
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In another bearish sign, API data showed gasoline inventories rose by about 2.6 million barrels, against analysts’ forecasts for a 1.1 million drawdown.
The market will be looking out for official U.S. inventory data from the Energy Information Administration due at 10:30 a.m. EST (1530 GMT) for a further view on demand in the world’s biggest economy.
Meanwhile, supply concerns remain as a European Union ban on Russian crude looms and the Organization of the Petroleum Exporting Countries and allies, or OPEC+, cuts output.
The EU will ban Russian crude imports by Dec. 5 and Russian oil products by Feb. 5, in retaliation to Russia’s invasion of Ukraine. (Reporting by Sonali Paul in Melbourne and Isabel Kua in Singapore; Editing by Himani Sarkar)
