London — Oil prices slipped on Wednesday after industry data showed that U.S. crude stockpiles rose more than expected and on concerns that a rebound in COVID-19 cases in top importer China would hurt fuel demand.
Brent crude futures were down $1.68, or 1.7%, to $93.68 a barrel by 1522 GMT, while U.S. West Texas Intermediate (WTI) crude futures had fallen $1.64, or 1.8%, to $87.27 a barrel. The benchmarks fell around 3% on Tuesday.
Last week, the market had latched onto hopes that China might be moving toward relaxing COVID-19 restrictions, but over the weekend health officials said they would stick to their “dynamic-clearing” approach to new infections.
COVID-19 cases in Guangzhou and other Chinese cities have surged, with millions of residents of the global manufacturing hub being required to have COVID-19 tests on Wednesday.
“With that (China reopening) narrative getting pushed back, coupled with a considerable build on U.S. inventory data, implying dimming U.S. demand, the recessionary crews are back out in full force this morning in Asia,” Stephen Innes, managing partner at SPI Asset Management, said in a note.
The market will get a further view on demand in the world’s biggest economy with the release of official U.S. inventory data from the Energy Information Administration at 10:30 a.m. EST (1530 GMT).
“If the large inventory build is confirmed by EIA today, it will be interesting to see if it generates a bigger reaction in the markets, with Brent now trading back in the middle of the $90-$100 range,” said Craig Erlam, senior markets analyst at OANDA.
Meanwhile, supply concerns remain.
The European Union will ban Russian crude imports by Dec. 5 and Russian oil products by Feb. 5, in retaliation for Russia’s invasion of Ukraine. Russia calls its actions in Ukraine a “special operation”.
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