Oil declines after unexpected build in U.S. inventory
Oil prices slipped on Thursday after industry data showed a surprise increase in U.S. crude inventories that revived pandemic-related fuel demand concerns, while U.S. stimulus hopes buoyed prices.
Brent crude futures fell 3 cents to $56.05 a barrel. U.S. West Texas Intermediate (WTI) crude futures settled 18 cents, or 0.3%, lower at $53.13 per barrel.
Both benchmarks rose over the past two days on expectations of massive COVID-19 relief spending under new U.S. President Joe Biden.
Late Wednesday, industry data showed U.S. crude oil inventories rose 2.6 million barrels last week, compared with analysts’ forecasts in a Reuters poll for a 1.2 million-barrel draw.
Elsewhere, compliance with a deal to cut output from the Organization of the Petroleum Exporting Countries and its allies fell in December from November. Compliance reached 99% last month, two sources told Reuters.
Meanwhile, rising coronavirus cases in China, the world’s largest crude oil importer, weighed on prices.
Beijing plans to impose strict virus testing requirements during the Lunar New Year holiday season, when tens of millions of people are expected to travel, as it battles the worst wave of new infections since March 2020.
The commercial hub of Shanghai reported its first locally transmitted cases in two months on Thursday.
Longer term, the Biden administration could be bearish for oil.
The markets will also follow expected U.S. efforts to strengthen nuclear constraints on oil producer Iran through diplomacy. It will raise the issue in early talks with foreign counterparts and allies, the White House said.
Reference: CNBC
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