Early trade on Wednesday saw a decrease in oil prices as industry data revealed a significant gain in U.S. crude stocks rather than the expected decline. This confirmed concerns about a weaker demand even as supply is becoming more constrained. West Texas Intermediate (WTI) crude futures for the United States decreased by 30 cents, or 0.4%, to $75.09, erasing a 3% gain from the previous session. At $80.30 a barrel, Brent crude futures were down 38 cents, or 0.5%.
Market sources citing data from the American Petroleum Institute reported that U.S. oil stockpiles increased by around 7.8 million barrels in the week to December 9; experts surveyed by Reuters had forecast a decline in stocks of 3.6 million barrels. According to API data, stockpiles of distillate and gasoline both increased by 3.4 million barrels and roughly 900,000 barrels, respectively.
Though the increase in distillate stocks which include heating oil and jet fuel was greater than anticipated, it was less than analysts had anticipated. The inventory data defied the bullish optimism that had driven the market higher by 3% in the previous session on expectations of a rebound in Chinese demand as a result of the relaxation of COVID-19 restrictions and on the back of a falling dollar following reports of declining U.S. inflation.
Data from the Chinese company VariFlight, which was used by ANZ Research analysts, showed that domestic travel was beginning to pick up in China. As of Monday, flight activity was up to about 65% of pre-pandemic levels, up from 22% on November 29. The failure of TC Energy Corp.’s Keystone Pipeline, which transports 620,000 barrels per day of Canadian oil to the United States, has also helped the market this week.
