Oil rises as US oil stockpiles drop, new Chinese Covid-19 cases decline
Oil prices climbed on 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 pick-up in demand.
Brent crude futures climbed 19 cents, or 0.3%, to $56.10 a barrel at 0452 GMT, adding to a small gain on Tuesday.
US West Texas Intermediate (WTI) crude futures rose 20 cents, 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.
(Also read | Oil dips after surprise rise in US crude stocks; focus on Joe Biden, stimulus)
The American Petroleum Institute (API) reported crude oil inventories in the United States, the world's biggest oil consumer, fell by 5.3 million barrels in the week to Jan. 22 compared with analysts' expectations in a Reuters poll for a build of 430,000 barrels.
However, the data showed gasoline 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 to 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 range-bound 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.
(Also read | Brent crude edges up as optimism over economy trumps demand concerns)
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 Jan. 11.
Typically, hundreds of millions of Chinese travel during the Lunar New Year holiday, which starts on Feb. 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.