Oil steadies as US inventory fall tempers demand woes

Oil prices steadied after an early jump on Wednesday as industry data showed a bigger-than-expected drop in US crude inventories, but rising global Covid-19 infections capped price gains.

Brent crude prices were down $0.04 at $56.54 a barrel by 1032 GMT. Prices rose to a session high of $57.42 a barrel earlier in the day, the highest since February 24.

The next milestone for Brent prices is a rise above $60, a level not seen since late January 2020.

US West Texas Intermediate (WTI) was up $0.03 at $53.24 a barrel, after hitting a session high of $53.93, its highest since February 20.

“The optimistic mood among investors, coupled with positive signs on the supply and demand sides, is ... lending support,” Commerzbank said.

Crude stocks in the US dropped by 5.8 million barrels last week to around 484.5 million barrels, data from the American Petroleum Institute showed late on Tuesday.

That was far more than analysts’ expectations in a Reuters’ poll for a fall of 2.3 million barrels.

Official Energy Information Administration inventory data is expected later on Wednesday.

Saudi Arabia cut supplies of crude for February loading for at least three Asian buyers while meeting requirements of at least four others, several refinery and trade sources told Reuters on Wednesday.

But rising Covid-19 death tolls in Europe and the United States and fresh virus containment measures elsewhere weighed on prices.

China recorded the biggest daily jump in Covid cases in more than five months, despite four cities in lockdown, increased testing and other measures aimed at preventing another wave of infections in the world’s second biggest economy.