It might have been a session of rough trading. However, market analysts consider that crude oil could restart its rally quickly following this week’s supply data and the developing COVID-19 situation in China.
March West Texas Intermediate (WTI) crude oil futures fell $0.08, or 0.15%, to $52.53 per barrel at 19:47 GMT on Wednesday. US crude prices have collapsed around 1.4% over the last couple of sessions, cutting their strong start to 2021 to under 9%.
Brent, the international benchmark for oil prices, is trading in the red in the trading week’s midst. March Brent crude futures dropped $0.31, or 0.56%, to $55.22 a barrel on London’s ICE Futures exchange. Brent has declined almost 1% over the last week, dropping its January gain to below 7%.
The US Energy Information Administration (EIA) stated domestic stockpiles declined by 9.9 million barrels for the week closing January 22. The market had penciled in a decrease of 1.7 million barrels.
Oil inventories at the Cushing, Oklahoma storage hub dropped by 2.3 million barrels. Gasoline supplies rose by 2.5 million barrels, while distillate stockpiles plunged by 800,000 barrels.
Despite the positive data, it was not sufficient to drive a strong rally.
Market analysts blame the dull performance to headwinds from an accelerating retreat from risk-on assets, states Matt Smith, director of commodity research at ClipperData. Although the Federal Reserve promised stimulus support, it was not adequate for investors to flow into equities.
Meantime, crude prices had experienced a bit of a pullback due to worries over the growing number of new COVID-19 cases in China. The central government forced various lockdowns and further limitations on nearly 30 million people. Nevertheless, the health authorities established that the number of infections dropped to the lowest level in longer than two weeks.
This is severe news for crude markets because China is one of the world’s biggest oil consumers.
In other energy commodities, March natural gas futures raised $0.051, or 1.93%, to $2.687 per million British thermal units (BTU). March gasoline futures fell $0.009, or 0.57%, to $1.5658 a gallon. March heating oil futures are bound up by $0.0051, or 0.32%, to $1.6035 per gallon.