Oil futures: Brent climbs 2.5% after US crude stock draw, offsets China concerns
Quantum Commodity Intelligence - Crude oil futures Wednesday were higher after the latest inventory data from the US revealed a sharp drop in crude stocks, although concerns over a rapid spread of Covid in China continued to keep the market on edge.
Front-month February ICE Brent futures were trading at $82.11/b (1800 GMT), compared to Tuesday's settle of $79.99/b.
At the same time, Feb23 NYMEX WTI was trading $78.16/b versus Tuesday's settle of $76.23/b.
Oil markets were bolstered after data from the American Petroleum Institute released late Tuesday revealed that US commercial crude inventories dropped by 3 million barrels last week. However, gasoline stocks increased by 4.14 million barrels, while distillate inventories fell by 830,000 barrels.
This was followed up Wednesday by a near-6 million barrel draw in crude stocks reported by the Energy Information Administration (EIA).
Meanwhile, anecdotal evidence from China indicates a rapid spread of Covid cases, which analysts said will likely put the breaks on an immediate boost to the economy after Beijing eased restrictions this month.
"Gains continue to be stifled by demand implication over the worrisome 2nd and 3rd wave Omicron case projections that are weighing on broader China's near-term economic forecasts. Not to mention year-end liquidity concerns are keeping many traders grounded," cautioned Stephen Innes, managing partner at SPI Asset Management.
Mobility in the world's second-largest oil-consuming nation has fallen 20% in the first three weeks of December compared to the corresponding period a year earlier, data from search engine Baidu showed.
According to the index, which measures movement in and out of big cities, personal mobility was 20% down on December 2021 figures but up around 10% on the whole of November 2022.
New Covid-19 infections in China rose to 3,049 on Wednesday from 2,656 on Tuesday, the National Health Commission reported, although analysts attribute little relevance now to official data.
The latest US cold snap was seen supporting prices as heating oil demand increases, while oil and gas output from the Bakken field could be impacted. However, some analysts cautioned it could be negative for gasoline demand with less driving over the holiday season.
