Oil prices rise on US drawdown, Chinese fears weigh

London — Oil prices rose on Wednesday after data suggested a larger-than-expected draw in US crude stockpiles, but gains were capped by growing concerns over demand in China and a snowstorm that is expected to hit US travel.

Brent crude futures were up $0.93, or 1.15%, at $80.92 a barrel by 1040 GMT. US West Texas Intermediate (WTI) crude futures gained $0.08, or 1.05%, to $77.03. Both contracts had risen by more than $1 earlier in the session.

US crude inventories fell by about 3.1-million barrels in the week to December 16, said market sources, citing data from the American Petroleum Institute. Nine analysts polled by Reuters had forecast a drop of 1.7-million barrels.

Prices were also boosted by comments from Saudi Arabia’s energy minister, who said on Tuesday that the heavily criticised move by OPEC+ to cut oil output turned out to be the right decision.

The comments suggest that OPEC+ may continue to keep supply tight, said CMC Markets analyst Tina Teng.

Potentially curtailing oil demand, huge parts of the US are forecast to face heavy snow that is likely to cause flight delays and impassable roads during one of the busiest travel periods of the year.

Worries about surging Covid-19 cases in China as the country begins dismantling its zero-Covid policy kept oil prices from moving higher.

However, China’s crude oil imports from Russia in November rose 17% year on year as Chinese refiners rushed to secure more cargoes ahead of a price cap imposed by the Group of Seven nations and an EU embargo from December 5.

Overall, Russian oil exports fell by 11% month on month for December 1-20 after the European Union’s embargo on Russian oil came into force, the Kommersant daily reported.

Reuters