Business Standard

Oil recoups some losses on Tuesday on signs of firm US fuel demand

API data showed crude stocks rose by about 593,000 barrels, against analysts' estimates of a drop of around 1.5 million barrels

crude oil

Oil recoups some losses on signs of firm US fuel demand. (Photo: Bloomberg)

Reuters MELBOURNE
Oil prices inched up on Wednesday as industry data showed U.S. fuel stocks fell more than expected, recovering slightly from a 5% drop on Tuesday on fears fuel demand will suffer as China steps up COVID-19 curbs and central banks hike interest rates.
U.S. West Texas Intermediate (WTI) crude futures rose 64 cents to $92.28 a barrel at 0012 GMT, after sliding $5.37 in the previous session driven by recession fears.
Brent crude futures climbed 48 cents, or 0.5%, to $99.79 a barrel, trimming Tuesday's $5.78 loss. The October contract expires on Wednesday. The more active November contract was up 61 cents, or 0.6%, at $98.45 a barrel.

The price swings since the Ukraine conflict began six months ago have rattled hedge funds and speculators and thinned trading, which in turn has made the market whipsaw even more, as seen on Tuesday.
Data from the American Petroleum Institute (API) showed gasoline inventories fell by about 3.4 million barrels, while distillate stocks, which include diesel and jet fuel, fell by about 1.7 million barrels for the week ended Aug. 26 [API/S].
The drawdown in gasoline inventories was nearly triple the 1.2 million barrel drop that eight analysts polled by Reuters had expected on average. For distillate inventories they had expected a drop of about 1 million barrels.
However API data showed crude stocks rose by about 593,000 barrels, against analysts' estimates of a drop of around 1.5 million barrels.

"Prices are also under pressure because of the hawkish stance of the major central banks, concerns about slower global growth, and weakening demand from China," said Sugandha Sachdeva, vice president of commodity research at Religare Broking.
Some of China's biggest cities - from Shenzhen to Dalian - are imposing lockdowns and business closures to curb COVID-19 at a time when the world's second-biggest economy is already experiencing weak growth.
"Worsening outbreaks of COVID-19 in China are also impacting sentiment," ANZ Research analysts said in a note.
On the supply side, oil exports from Iraq were unaffected by the worst violence seen in Baghdad for years, three sources told Reuters on Tuesday. Clashes eased on Tuesday after powerful cleric Moqtada al-Sadr ordered his followers to end their protests.

The main factor supporting prices at the moment is talk from members of the Organization of the Petroleum Exporting Countries (OPEC) and allies, together called OPEC+, that they might cut output to stabilise the market. OPEC+ is next due to meet on Sept. 5.
"As far as OPEC cuts go, I don't think anybody believes that immediate cuts are going to have major effects," said Sukrit Vijayakar, director of energy consultancy Trifecta.

Secondly, since the threat of a recession seems to be real, investors would be willing to let Brent hover between $90 and $110 for now, he added.

 
(Reporting by Mohi Narayan in New Delhi and Sonali Paul in Melbourne; Editing by Christopher Cushing and Kenneth Maxwell)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Don't miss the most important news and views of the day. Get them on our Telegram channel

First Published: Aug 31 2022 | 7:51 AM IST

Explore News