Oil prices fell on Wednesday due to industry data revealing higher-than-anticipated increases in U.S. crude stocks and worries that a rise in COVID-19 cases in top importer China would reduce demand for fuel.
By 1000 GMT, Brent oil futures had been down by 61 cents, or 0.6%, to $94.75 per barrel. Meanwhile, U.S. West Texas Intermediate (WTI) crude futures had decreased by 68 cents, or 0.7%, to $88.23 per barrel. On Tuesday, the benchmarks decreased by around 3%. U.S. crude oil stockpiles increased by around 5.6M barrels for the week ending November 4. Seven experts surveyed predicted an average increase in crude inventories of about 1.4M barrels.
Will There Be an End to China’s COVID Restrictions?
The market had hoped that China could be loosening COVID-19 restrictions as of last week, but over the weekend, health officials said that they would continue to take a “dynamic-clearing” approach to new infections. As a result of the spike in COVID-19 cases in Guangzhou and other Chinese cities, millions of people living in the center of global manufacturing had to undergo COVID-19 testing on Wednesday. The recessionary crews are back in full force this morning in Asia, according to Stephen Innes, the managing partner at SPI Asset Management. He noted that China’s reopening narrative is getting pushed back, coupled with a considerable build on U.S. inventory data, implying dimming U.S. demand.
The market will be waiting for official U.S. inventory data from the Energy Information Administration, arriving at 10:30 a.m. EST to fully understand demand in the world’s largest economy (1530 GMT). Concerns about supplies are still present. According to a report from ING commodities analysts, Russian oil output should decrease when the EU embargo on Russian crude and processed products takes effect, in addition to current OPEC+ supply restrictions.