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Oil futures traded higher Wednesday, finding support as data showed a larger-than-expected drop in U.S. crude inventories and traders continued to weigh the omicron variant’s effect on demand.
Crude bounced back strongly on Tuesday, taking back a chunk of ground lost in a two-day selloff attributed to fears the spread of omicron would take a toll on travel and other activities over the holidays as countries impose restrictions and individuals curtail movement on their own.
West Texas Intermediate crude for February delivery
CL00,
CLG22,
rose 92 cents, or 1.3%, to $72.04 a barrel on the New York Mercantile Exchange. February Brent crude
BRN00,
BRNG22,
the global benchmark, was up 75 cents, or 1%, at $74.73 a barrel on ICE Futures Europe. WTI jumped 3.7% on Tuesday, while Brent rose 3.4%.
Oil initially pared gains, then pushed to a new session high after the Energy Information Administration said U.S. crude inventories fell by 4.7 million barrels last week. Analysts surveyed by S&P Global Platts, on average, had looked for a decline of 3.9 million barrels, while sources said the American Petroleum Institute late Tuesday had reported a fall of 3.67 million barrels.
Gasoline inventories, however, jumped 5.5 million barrels, versus analyst expectations for a rise of 600,000 barrels and API data showing a 3.7 million barrel increase. The EIA said distillate stocks rose by 400,000 barrels. Analysts had looked for a decline of 1.6 million barrels, while API data was said to show a fall of 849,000 barrels.
“A bullish draw to crude inventories has been somewhat offset by a large build to gasoline stocks as implied demand dipped significantly after last week’s pop higher. Distillates showed a minor build despite implied demand also showing a decent drop,” said Matt Smith, lead oil analyst, Americas, at Kpler, in emailed comments.
The draw on crude inventories was driven by a decline on the U.S. Gulf Coast amid stronger refinery runs, while imports were once again subdued due to end-of-year ad valorem tax considerations, Smith said, while continued strength in exports also pulled down Gulf Coast stocks.
On the charts, prices remain in the medium-term ascending channel, and within a short-term descending trend band, said Ipek Ozkardeskaya, senior analyst at Swissquote, in a note. A move above $72 a barrel could give hope to bulls, but “omicron risks are looming, global economic activity is slowing, and the risk appetite in recovery assets, like oil, remains very much fragile,” the analyst wrote.
January natural-gas futures
NGF22,
rose 3.5% to $4.005 per million British thermal units.
January gasoline futures
RBF22,
were up 0.1% at $2.154 a gallon, while February heating oil
HOG22,
rose 1% to $2.273 a gallon.
