Oil Up Over Drop in U.S. Crude Oil Supplies and Chinese COVID-19 Cases

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By Gina Lee

Investing.com – Oil was up Wednesday morning in , boosted by a surprise draw in U.S. supplies and a drop in Chinese COVID-19 cases raising hopes for increased fuel demand.

futures was up 0.41% to $55.87 by 11:08 PM ET (4:08 AM GMT) and WTI futures gained 0.51% to $52.88. Both Brent and WTI futures remained above the $50 mark.

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Crude oil data from the American Petroleum Institute (API) released on Tuesday showed a draw of 5.272 million barrels for the week ending Jan. 22. Forecasts prepared by Investing.com had predicted a 603,000-barrel build, and API reported a 2.562-million-barrel build during the previous week.

The data also showed gasoline stocks rose by a bigger-than-expected 3.1 million barrels.

“The crude oil drawdown has offered some support to the market in early trading this morning with the market expecting a build … on the product side, the numbers were less constructive,” ING economics said in a note.

Distillate fuel inventories, including diesel and heating oil, rose by 1.4 million barrels against expectations for a draw of 361,000 barrels, and refinery runs fell by 76,000 barrels per day.

“It’s difficult for oil to make a definitive near-term shift to the next price level higher given the very uncertain near-term demand outlook,” Axi Global Markets Strategist Stephen Innes said in a note.

Investors now await data from the U.S. , due later in the day.

However, the black liquid was boosted by China’s report of a decline in daily COVID-19 cases. The news in the world’s largest oil importer eased worries about the expected sharp drop in travel over the upcoming Lunar New Year holidays.

The country reported 75 new daily of COVID-19 cases on Wednesday, the lowest daily rise since Jan. 11. However, travel over the holidays, which usually sees hundreds of millions travel to their hometowns, has been discouraged to prevent the spread of COVID-19.

“There are rising concerns that the outbreak in China will see crude oil demand suffer,” ANZ said in a note, which cited Ministry of Transport estimates that the number of passenger trips taken will decrease 40% from 2019.

The number of global COVID-19 cases surpassed the 100 million mark as of Jan. 27, according to Johns Hopkins University data.

Source: Investing.com

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