MELBOURNE: Oil prices steadied on Thursday after falling for three days as the impact of renewed COVID curbs in China, the world’s biggest crude importer, weighed and traders await U.S. inflation data that may give direction on further interest rate increases.
Brent crude futures fell 2 cents to $92.63 a barrel at 0534 GMT. U.S. West Texas Intermediate (WTI) crude futures were down 8 cents at $85.75 a barrel.
Brent prices have dropped more than 6% so far this week, while WTI is down more than 7%.
The manufacturing hub of Guangzhou, a city of 19 million people, on Thursday reported more than 2,000 new cases for Nov. 9, the third day above that level, in the city’s worst outbreak so far. Millions of residents were told to get tested for COVID-19 on Wednesday, and one city district has been locked down, as local cases across China reached their highest since April 30.
Consumer price index (CPI) data for the United States will be released later on Thursday that is expected to show a slowdown in the inflation rate for both the monthly and yearly core numbers. That may lead the U.S. Federal Reserve to reduce the size of their planned interest rate increases which would be considered a postive for economic and oil demand growth.
Prices were also under pressure after a big build in U.S. crude inventories reported on Wednesday.
“The outlook for oil prices has become more cautious,” said analysts from Haitong Futures in Shanghai. “The U.S. CPI data … will further affect market expectations from the macro level, which further increases the market’s wait-and-see sentiment.”
Crude oil stockpiles rose by 3.9 million barrels last week, the U.S. Energy Information Administration said, taking inventories to their highest since July 2021.
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However, gasoline inventories fell by 900,000 barrels to their lowest since November 2014 and distillate stockpiles fell by 500,000 barrels.
Bearishness around the rise in U.S. crude oil stockpiles may have been overdone, Commonwealth Bank analyst Vivek Dhar said.
He noted that distillate stockpiles, which include diesel, heating oil and jet fuel, fell to their lowest in a decade and the number of days those inventories can meet expected demand is at 26, nearly five days below the five-year average, “indicating much tighter conditions than U.S. oil or gasoline markets”.
