Oil prices dip on U.S. inventory build, China COVID worries

Oil prices dip on U.S. inventory build, China COVID worries

Oil prices slipped on Wednesday after industry data showed that U.S. crude stockpiles rose more than expected and on concerns that a rebound in COVID-19 cases in top importer China would hurt fuel demand, Reuters reported.

Brent crude futures fell 61 cents, or 0.6%, to $94.75 a barrel by 1000 GMT, while U.S. West Texas Intermediate (WTI) crude futures fell 68 cents, or 0.7%, to $88.23 a barrel. The benchmarks fell around 3% on Tuesday.

U.S. crude oil inventories rose by about 5.6 million barrels for the week ended Nov. 4, according to market sources citing American Petroleum Institute figures, while seven analysts polled by Reuters estimated on average that crude inventories would rise by about 1.4 million barrels.

Last week, the market had latched onto hopes that China might be moving toward relaxing COVID-19 restrictions but over the weekend health officials said they would stick to their “dynamic clearing” approach to new infections.

COVID-19 cases in Guangzhou and other Chinese cities have surged, with millions of residents of the global manufacturing hub being required to have COVID-19 tests on Wednesday.

“With that (China reopening) narrative getting pushed back, coupled with a considerable build on U.S. inventory data, implying dimming U.S. demand, the recessionary crews are back out in full force this morning in Asia,” Stephen Innes, managing partner at SPI Asset Management, said in a note.