London — Oil prices rose on Wednesday as data showing a larger-than-expected US crude drawdown last week outweighed concerns about lower demand from China.
Brent crude futures rose $1.03, or 1.17%, to $89.39 a barrel at 9.41am GMT, while US West Texas Intermediate (WTI) crude futures gained 86 cents, or 1.06%, to $81.81 a barrel.
US crude inventories fell by about 4.8-million barrels for the week ended November 18, data from the American Petroleum Institute showed, according to market sources.
Analysts polled by Reuters on average had expected a 1.1-million barrel drawdown in crude inventories.
US stock data from the Energy Information Administration (EIA) is due at 3.30pm GMT on Wednesday.
Prices continued to see support from denials by key Opec producers including Saudi Arabia that the group and its allies, together called Opec+, were not considering boosting oil output. Opec+ next meets on December 4.
Uncertainty over how Russia will respond to plans by the Group of Seven (G7) nations to cap Russian oil prices also provided some support to the market.
The price cap is due to be announced soon, a senior US Treasury official said on Tuesday, adding that it will probably be adjusted a few times a year. “The only issue now is the economy, China, and what impact the G7 decision will have on Russian output. I don’t think volatility is going anywhere,” said Craig Erlam, senior market analyst at Oanda.
These bearish factors have offset demand concerns relating to top crude oil importer China, which has been grappling with a surge in Covid-19 cases.
Late on Tuesday, financial hub Shanghai tightened rules for people entering the city while Beijing shut parks and museums.
Also adding pressure was an OECD economic outlook that sees a deceleration in global economic expansion in 2023.
“On the bright side, the OECD does not envisage a global recession and maybe this helped oil prices and stocks strengthen further,” said analyst Tamas Varga at PVM Oil Associates.
The market also awaits the minutes from the US Federal Reserve’s November policy meeting due at 7pm GMT for clues on possible economic contraction and further rate hikes, Varga said.