By Myra P. Saefong
Oil prices fell on Wednesday, giving up modest early gains, despite US government data showing domestic crude oil supplies fell more than 5 million barrels last week, down for the fourth consecutive week, although gasoline and distillate inventories each rose sharply. .
Concerns that further interest rate hikes by the Federal Reserve could cause a recession have spread through markets in recent days, driving oil prices down for three consecutive sessions, despite concerns over the impact of the Group of Seven price cap on Russian oil imposed on Monday .
price action
Provide data
The Energy Information Administration on Wednesday reported a fourth consecutive weekly decline in U.S. crude inventories, but gasoline and distillate inventories climbed.
“If crude inventories can continue to fall, it would likely challenge the generally bearish trend that has defined [oil] prices last month,” said Robbie Fraser, director, Global Research & Analytics at Schneider Electric.
Domestic commercial crude inventories fell 5.2 million barrels for the week ended Dec. 2, the EIA said.
On average, analysts were forecasting a drop of 2.6 million barrels, according to a survey by S&P Global Commodity Insights. The American Petroleum Institute, a trade group, reported late Tuesday that crude supplies fell by 6.4 million barrels last week, Dow Jones reported, citing a source.
“Continued strength in refining activity and exports encouraged another drawdown” for crude supplies, said Matt Smith, senior oil analyst, Americas, at Kpler, in reaction to the supply data.
As transfers from the U.S. Strategic Petroleum Reserve slow, U.S. commercial inventories are now at year-to-date lows, “expected for further decline in the coming weeks,” he said. declared.
The EIA, however, showed weekly inventory gains of 5.3 million barrels for gasoline and 6.2 million barrels for distillates. The S&P Global Commodity Insights survey had called for increases of 2.9 million barrels for gasoline and 1.9 million barrels for distillates.
Crude inventories at the Cushing, Okla., Nymex delivery hub fell 400,000 barrels for the week, the EIA said, while SPR inventories fell 2.1 million barrels.
Other Market Drivers
China has announced steps to roll back some of its COVID-19 restrictions. These include limiting severe closures and ordering schools with no known infections to resume regular classes, the Associated Press reported Wednesday.
“Traders are looking for more positive news regarding China’s zero-tolerance COVID policies,” Naeem Aslam, chief market analyst at AvaTrade, said in a market update.
And now, “we’ve heard from officials about a further easing of these measures”, providing support for investor sentiment in Asia – with the “spillover of this sentiment” likely affecting Europe and the United States given that China is the second largest economy in the world, he said.
But Stephen Innes, managing partner at SPI Asset Management, warned that “China’s COVID tsunami is coming as the world’s most populous nation is forced to take a zero COVID exit ramp”, after “far too much reopening China’s early “supported some markets. . “It will be a tale of two haves in China, where winter oil prices and COVID mobility issues give way to hope for an eternal spring in the second quarter.”
-Myra P. Saefong
(END) Dow Jones Newswire
12-07-22 1102ET
Copyright (c) 2022 Dow Jones & Company, Inc.
