Oil prices edged up slightly Wednesday as data showing a larger-than-expected drop in U.S. crude last week outweighed concerns about lower fuel demand from China amid tightening COVID-19 limits.
Brent crude oil futures were up 27 cents, or 0.3%, to 88.63 dollars a barrel at 07:19 GMT, while US West Texas Intermediate (WTI) crude oil futures gained 25 cents, or 0.3%. 0.3%, to $81.20 a barrel.
Both benchmark contracts rose about 1% on Tuesday as the UAE, Kuwait, Iraq and Algeria reinforced comments by Saudi Arabia’s Energy Minister that the Organization of the Petroleum Exporting Countries (OPEC ) and the allies, collectively called OPEC+, were not considering increasing oil production. OPEC+ will meet to review production on December 4th.
U.S. crude inventories fell by about 4.8 million barrels for the week ending Nov. 18, according to data from the American Petroleum Institute, according to market sources.
Analysts polled by Reuters on average expected a draw of 1.1 million barrels in crude inventories.
Distillate inventories, which include heating oil and jet fuel, rose by about 1.1 million barrels versus analyst expectations for a decline of 600,000 barrels.
Uncertainty over how Russia will respond to plans by Group of Seven (G7) nations to cap Russian oil prices has also provided some support to the market.
The price cap is expected to be announced soon, a senior US Treasury official said on Tuesday, adding that it will likely be adjusted a few times a year.
“Traders are closely monitoring Russia’s exports and will look at how much they could cut the nation’s foreign sales in retaliation, which could be a bullish boost to oil prices,” SPI managing partner Stephen Innes said in a statement. Asset Management.
Meanwhile, major crude oil importer China has been grappling with a surge in COVID cases that has deepened concerns about its economy and could continue to limit gains in oil prices, the analyst said by CMC Markets Tina Teng.
On Tuesday, Shanghai’s financial center tightened rules for people entering the city while Beijing closed parks and museums.
Teng said traders were also cautious ahead of the release of the US Federal Reserve minutes from its November policy meeting scheduled for 7:00pm GMT.
“The Fed is expected to signal a slowdown in rate hikes, but any surprising hawkish recurrence will weigh on sentiment, lifting the US dollar and putting pressure on commodity prices,” Teng said.