Oil dips after unexpected rise in US crude stocks

Rising Covid-19 cases in China also weigh on prices

LONDON:

Oil slipped on Thursday after industry data showed a surprise increase in US crude inventories that revived pandemic-related demand concerns, but US stimulus hopes limited the price downturn.

Brent crude futures fell $0.47, or 0.8%, to $55.61 a barrel by 1030 GMT.

US West Texas Intermediate (WTI) crude futures fell $0.43, or 0.8%, to $52.88 a barrel, following two days of gains on expectations of massive Covid-19 relief spending under new US President Joe Biden.

US crude oil inventories rose 2.6 million barrels in the week to January 15, according to data from industry group American Petroleum Institute, compared with analysts’ forecasts in a Reuters’ poll for a 1.2-million-barrel fall.

Official Energy Information Administration (EIA) inventory data is due on Friday.

 “If delayed EIA numbers show a similar crude oil build, it would be the first build seen since early December,” analysts at ING bank said.

Rising Covid-19 cases in China, the world’s largest crude oil importer, also weighed on prices.

Beijing plans to impose strict Covid testing requirements during the Lunar New Year holiday season, when tens of millions of people are expected to travel, as it battles the worst wave of new infections since March 2020.

The commercial hub of Shanghai reported its first locally transmitted cases in two months on Thursday.

Elsewhere, new US President Joe Biden’s administration has committed to curb carbon emissions and among his first actions as president, Biden announced America’s return to the Paris climate accord and revoked a permit for the Keystone XL oil pipeline project from Canada.

The administration is also committed to ending new oil and gas leasing on federal land.

The administration will also seek to lengthen and strengthen nuclear constraints on Iran through diplomacy and will be raising the issue in early talks with foreign counterparts and allies, according to the White House.