London — Oil prices slipped on Wednesday after industry data showed that US crude stockpiles rose more than expected and on concerns that a rebound in Covid-19 cases in top importer China would hurt fuel demand.
Brent crude futures fell 61c, or 0.6%, to $94.75 a barrel by 10am GMT, while US West Texas Intermediate (WTI) crude futures fell 68c, or 0.7%, to $88.23 a barrel. The benchmarks fell about 3% on Tuesday.
US crude oil inventories rose by about 5.6-million barrels for the week ended November 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 towards 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 US inventory data, implying dimming US 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.
In another bearish sign, API data showed gasoline inventories rose by about 2.6-million barrels, against analysts’ forecasts for a 1.1-million drawdown.
The market will be looking out for official US inventory data from the Energy Information Administration due at 3.30 GMT for a further view on demand in the world’s biggest economy.
Meanwhile, supply concerns remain.
“In addition to ongoing Opec+ supply cuts, Russian oil supply should fall as the EU ban on Russian crude and refined products comes into effect,” ING commodities strategists said in a note.
The EU will ban Russian crude imports by December 5 and Russian oil products by February 5, in retaliation to Russia’s invasion of Ukraine. Russia calls its actions in Ukraine a “special operation”.