Crude oil prices rallied on Wednesday as demand recovery hopes from main importer China after exiting the Covid-19 pandemic provided support after prices fell in the previous session on concerns about global economic growth .
Brent crude oil futures rose 59 cents, or 0.7 percent, to $86.72 a barrel by 0214 GMT after falling 2.3 percent in the previous session. U.S. West Texas Intermediate (WTI) crude oil futures rose 46 cents, or 0.6 percent, to $80.59 a barrel, after falling 1.8 percent on Tuesday.
Economic concerns were exacerbated by a larger-than-expected rise in US oil inventories, reported after the market calmed down on Tuesday.
U.S. crude inventories rose by about 3.4 million barrels in the week ending Jan. 20, according to market sources citing figures from the American Petroleum Institute on Tuesday. That was triple the prediction of about 1 meter in a preliminary Reuters poll on Monday.
“But the construction is expected to be temporary, as supply disruptions due to a cold spell in the United States a few weeks ago would only affect data in the coming weeks,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities. . .
Official data from the US Energy Information Administration will be released later on Wednesday.
“The expectation that fuel demand in China will recover in the second half of the year is increasing and is likely to support market sentiment,” said Kikukawa, who forecasts WTI to trade between $75 and $85 a barrel in the coming weeks.
Oil supply should remain stable in the medium term as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as Opec+, are expected to maintain their production quotas.
An Opec+ panel is likely to approve the producer group’s current oil production policies when it meets next week, five Opec+ sources said Tuesday, as hopes of higher Chinese demand are offset by concerns about inflation and the global economy.