By Noah Browning
LONDON (Reuters) – Oil prices fell on Wednesday after industry data showed inventories rose more than expected and on fears that a rebound in COVID-19 cases at China’s top importer could hurt on demand for fuel.
futures fell 61 cents, or 0.6%, to $94.75 a barrel by 1000 GMT, while US West Texas Intermediate (WTI) crude futures fell 68 cents, or 0.7%, to 88.23 dollars a barrel. Benchmarks fell about 3% on Tuesday.
U.S. crude oil inventories rose about 5.6 million barrels for the week ended Nov. 4, market sources said, citing figures from the American Petroleum Institute, while seven analysts polled by Reuters estimated on average that crude inventories would increase by about 1.4 million barrels.
Last week, the market had clung to hopes that China might be moving towards easing COVID-19 restrictions, but over the weekend health officials said they would stick to their “dynamic cleaning” approach of new infections.
COVID-19 cases in Guangzhou and other Chinese cities have surged, with millions of residents of the global manufacturing hub due to undergo COVID-19 tests on Wednesday.
“With this (China’s reopening) narrative pushed back, coupled with a huge increase in US inventory data, implying lower US demand, recession teams are back in full force this morning in Asia,” said Stephen Innes, Managing Partner at SPI Asset. Management, said in a note.
In another bearish sign, API data showed gasoline inventories rose by around 2.6 million barrels, against analysts’ forecasts for a drawdown of 1.1 million.
The market will look for official US inventory data from the Energy Information Administration at 10:30 a.m. EST (1530 GMT) for a deeper view of demand in the world’s largest economy.
Meanwhile, supply issues remain.
“In addition to ongoing OPEC+ supply cuts, Russian oil supply is set to fall as the EU ban on Russian crude and refined products comes into effect,” the strategists said. of ING Commodities in a note.
The EU will ban imports of Russian crude by December 5 and Russian petroleum products by February 5, in retaliation for the Russian invasion of Ukraine. Russia calls its actions in Ukraine a “special operation”.