Early on Wednesday in Asian trading, oil prices increased, reversing losses from the previous session, as worries about restricted supply due to news of falling US stocks outweighed concerns about declining demand from top oil importer China. Brent crude futures were up 73 cents, or 0.8%, at $90.76 per barrel. U.S. West Texas Intermediate crude was up $1.13 or 1.4% to $83.95 per barrel. On Thursday, the front-month contract for WTI expires.
In the previous session, news that U.S. President Joe Biden intended to release more barrels from the Strategic Petroleum Reserve (SPR) and concerns over waning Chinese gasoline demand caused Brent and WTI to hit two-week lows and drop 1.7% and 3.1%, respectively. According to market sources citing American Petroleum Institute data on Tuesday, U.S. crude oil stocks decreased by around 1.3 million barrels for the week ending October 14.
According to an extended Reuters poll released on Tuesday, U.S. crude stocks were predicted to have risen by 1.4 million barrels in the week ending October 14 for a second straight week. The U.S. Department of Energy’s statistical division, the Energy Information Administration, is required to submit inventory data by Wednesday at 10:30 a.m. (1430 GMT). Better risk sentiment, which was boosted by positive U.S. corporate profits and a halt in the rise in bond yields, also helped to support oil prices, according to CMC Markets analyst Tina Teng. Therefore, Teng continued, “the recession fear-driven selloff in the oil markets eased.”
Energy markets shouldn’t be surprised if Biden continues to be active in tapping the SPR, according to ANZ Research analysts. “The price at the pump is a vital weekly reminder for the consumer,” they wrote in a note. The EU’s emergency oil reserves, which include crude oil and petroleum products, modestly increased in July after two coordinated releases reduced them to record lows in June, but they remained 3.7% lower than in July 2021, according to data released on Tuesday by the bloc’s statistics office. Fears of decreased Chinese gasoline consumption as a result of China’s continued adherence to its strict zero-COVID policy restrained oil price rises.