NEW YORK (Reuters) – Oil prices changed little on Wednesday, supported by a larger-than-expected drop in U.S. crude oil inventories but under pressure as rising global COVID-19 cases threatened global fuel demand .
Brent crude oil prices fell 7 cents to $ 56.51 a barrel at 10:55 am EST (1555 GMT). An earlier hike took prices down to $ 57.42 a barrel, the strongest since February 24.
US West Texas Intermediate (WTI) fell 11 cents, or 0.3%, to $ 53.32. The session high of $ 53.93 was the highest since February 20.
U.S. crude oil inventories declined by 3.2 million barrels in the week of January 8 to 482.2 million barrels, exceeding analysts’ expectations in a Reuters poll for a decline of 2.3 million barrels as the refineries have increased crude oil runs, the Energy Information Administration said. [EIA/S]
“The sharp rise in refining activity has led to a fifth consecutive draw in oil inventories, pushing them to a low since last March,” said Matt Smith, director of commodities research at ClipperData.
Refinery crude oil runs have increased by 274,000 barrels per day in the past week, the EIA said.
Adding optimism for a tight market, Saudi Arabia cut crude oil supplies for the February cargo to at least three Asian buyers, meeting the requirements of at least four others, several refinery and trading sources told Reuters.
But the rise in COVID-19 cases that continue to spur restrictions on travel and other activities by governments around the world have limited oil prices and the pandemic should cast a shadow on the market for months to come. analysts said.
“Even as I see crude oil prices trading higher in the coming months, investors need to be aware that the road to higher oil demand and prices will remain bumpy,” said UBS oil analyst Giovanni Staunovo.
Governments across Europe announced tougher and longer lockdowns of the coronavirus on Wednesday over fears of a rapidly spreading variant first detected in Britain, with vaccinations not expected to help much for another two to three months.
China recorded the largest daily increase in COVID cases in more than five months, despite four cities being shut down, increased testing and other measures aimed at preventing another wave of infections in the world’s second largest economy.
Additional reporting by Ahmad Ghaddar in London and Aaron Sheldrick in TOKYO; Editing by Kirsten Donovan, Philippa Fletcher and David Gregorio